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Bill Bengen: Revisiting Safe Withdrawal Rates

The creator of the 4% guideline discusses the implications of higher inflation and elevated equity valuations for new retirees.

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Our guest on the podcast today is William Bengen. Bill has been a prolific researcher of retirement planning matters over his career, and he pioneered the exploration of safe withdrawal rates with his groundbreaking 1994 research that gave birth to what's now called the 4% rule. Bill is the former owner of Bengen Financial Services, an independent Registered Investment Advisor that he launched in 1989, after his family sold the soda-bottling business that he had helped manage. He received his Bachelor of Science degree in aeronautics and astronautics from MIT. Bill retired from his financial planning practice in 2013 but continues to conduct research on retirement planning and withdrawal rates. We're excited to have him here today.


In-Retirement Withdrawal Rates and Asset Allocation

"The Originator of 'the 4% Rule' Thinks It's Off the Mark. He Says It Now Could Be Up to 4.5%," by Neal Templin,, Jan. 23, 2021.

"The Planner's Toolkit for Managing Retirement Withdrawal Plans," by William Bengen,, April 2021.

"Resolving the Paradox--Is the Safe Withdrawal Rate Sometimes Too Safe?" by Michael Kitces,, May 2008.

"Bill Bengen Revisits the 4% Rule Using Schiller's CAPE Ratio, Michael Kitces's Research," by Bill Bengen,, Dec. 17, 2020.

"Can We Raise Our Safe Withdrawal Rate When Inflation Is Low?", Oct. 26, 2020.

"Economic Outlook: Still Rising," by Preston Caldwell,, Oct. 3, 2021.

"Jonathon Guyton: What the Crisis Means for Retirement Planning," The Long View Podcast,, June 17, 2020.

"Determining Withdrawal Rates Using Historical Data," by William Bengen,

"The Rules of Retirement Spending Are Changing," by Anne Tergesen,, Nov. 26, 2021.

"Choosing the Highest Safe Withdrawal Rate at Retirement," by William Bengen,, Oct. 1, 2020.


Christine Benz: Hi, and welcome to The Long View. I'm Christine Benz, director of personal finance and retirement planning for Morningstar.

Jeff Ptak: And I'm Jeff Ptak, chief ratings officer for Morningstar Research Services.

Benz: Our guest on the podcast today is William Bengen. Bill has been a prolific researcher of retirement planning matters over his career, and he pioneered the exploration of safe withdrawal rates with his groundbreaking 1994 research that gave birth to what's now called the 4% rule. Bill is the former owner of Bengen Financial Services, an independent Registered Investment Advisorthat he launched in 1989, after his family sold the soda-bottling business that he had helped manage. He received his Bachelor of Science degree in aeronautics and astronautics from MIT. Bill retired from his financial planning practice in 2013 but continues to conduct research on retirement planning and withdrawal rates. We're excited to have him here today.

Bill, welcome to The Long View.

Bill Bengen: Thanks for inviting me. Glad to be here.

Benz: Well, we're happy to have you here. You pioneered the research in safe withdrawal rates starting back in 1994, and you and others have revisited the topic over the ensuing 25-plus years. The question is what were retirees and advisors doing before your original 4% guideline research? Did the fact that yield, organic yields, were higher in the decade leading up to the 1990s make serious study of how much you could safely take out unnecessary? Or how were people approaching it?

Bengen: I didn't become an advisor until 1989. So, I actually didn't have any clients that were in the retirement or approaching retirement at first. I don't know what other advisors were doing other than that--my understanding was that the recommendations were all over the lot. They were as high as 8%, and they were as low as 2%, depending upon whether you believed bonds or stocks were appropriate for retirees. The higher yields were helpful in the '90s from bonds, but you have to recall that we were increasing our withdrawals with inflation. Bonds are not particularly useful for that over time. We need something that can keep up with inflation. Stocks usually fit the bill. So, I feel that always stocks and bonds are both essential components of a retirement portfolio.

Ptak: I think we want to get into some of those topics that you just mentioned, in particular, inflation a little bit later in the conversation. But I did want to explore the relationship between valuation and withdrawal rates. I think that your research points to there being a high inverse correlation between the CAPE Ratio and withdrawal rates--the lower the CAPE Ratio, the higher the withdrawal rates--that would have been supported. But there can also be outlier situations where even though the CAPE Ratio was high at the start of someone's withdrawal period, they were able to take more because price multiples expanded during their retirement. So, the question is, how should retirees and their advisors incorporate valuations into their withdrawal systems and what role might inflation play in that calculation?

Bengen: Back in 2008, Michael Kitces, a renowned advisor, developed a chart which showed there was a strong correlation between stock market valuation, or CAPE, and the safe withdrawal rate for a particular year. I thought that was an amazing discovery. When you look at it closely though, it's very hard to use the CAPE to predict what a safe withdrawal rate is, because it's only about a 74%, 75% correlation. And you can choose several years that had identical market valuations and have a variation of up to 50% in the safe withdrawal rate. So, although it was a big step forward, it wasn't enough to provide predictive power. Last summer, I made a breakthrough when I found that if you add inflation, the starting inflation regime, into the picture, you get a much higher correlation. And using stock market valuation and using inflation together, you get a really good fix on what a safe withdrawal rate should be, at least historically.

Ptak: Maybe you can elaborate on that. What is the framework that you're describing using inflation in tandem with valuation in order to predict what might be a sustainable withdrawal rate in the future?

Bengen: When I took a look at the data, I discovered that you could aggregate withdrawal rates by inflation rate--the starting inflation rate creates what I call six inflation regimes. Each regime is about 2.5 points of inflation, like a low inflation regime would be from 0% inflation to 2.5%; modern inflation would be 2.5% to 5%, and so on. You could divide all the historical data into six inflation regimes. And when you sort that, and then within that, by the Shiller CAPE, it's an astoundingly close correlation. When you have low inflation and you have cheap stock market valuations is when you get your very high withdrawal rates as high as 13%, historically. And when you get a scenario like you had in the late '60s, early '70s, when you have high inflation and coming off high stock valuations, that's when you had your worst withdrawal rates. So, that's the framework that has emerged from all this work.

Benz: To follow up on that, and thinking about the current time frame, it does seem like in some respects, from that standpoint, we're looking at a perfect storm right now, and that we do have fairly high equity valuations, rising inflation, and very low bond yields. So, what does that translate into, from your standpoint, with respect to, say, starting withdrawal rates?

Bengen: The current environment it just sends you off the charts. We have valuations--we're almost 40 on the CAPE, which is only achieved once before, but we have higher inflation than was present when we reached that 40 level before. So, literally, it's almost impossible to tell what the safe withdrawal rate will be from this environment. It's unprecedented. I'm hoping that the 4.7% rate I developed recently holds, but there's possibility it might not if inflation becomes sticky and becomes like a 1970's kind of phenomenon. Of course, that's not certain yet. We don't know--it may return; it may be transitory.

Ptak: Does it depend on when in the retirees' drawdown period the high inflation occurs? Is it the high inflation early on that is especially worrisome because it inflates all subsequent withdrawals?

Bengen: That's exactly right. The early years in retirement are crucial. Both for inflation and for stock market action. What happens in those first five to seven years pretty much are going to set the tone for the rate in your retirement. And it's true of inflation. If you take a look at investors who retired in the late 1950s, they didn't really experience high inflation for about 10 or 12 years. And in the late '50s, a safe withdrawal rate was 6%, 6.5% because of the low inflation and the moderate valuation. So, yes, inflation early in retirement is particularly dangerous because it permanently inflates your withdrawal.

Benz: Do you think that the past decade of really low inflation made investors and their advisors complacent about the role and the risks that inflation can pose to a financial in retirement plan?

Bengen: So many advisors simply haven't seen high inflation. It's been 30 years or more--30 to 35 years. So, they haven't experienced in their career. I don't know if it's complacent or just simply ignorance of the devastating effects that high inflation can have on a portfolio. I hope we're not about to find out. I hope this inflation is not going to be anything like we had in the '70s. Very, very painful.

Ptak: We know that equity valuations are loosely predictive of future stock returns. We referenced that earlier. And bond yields are predictive of the returns that bond investors will earn more or less. What factors, in your experience, tend to be predictive for how inflation may play out over retirees' drawdown period?

Bengen: Now, that's really a question for an economist. I really don't know, to be perfectly honest with you, what you can use to predict inflation. It seems to me it depends on a complex set of factors. Because I look at our scenario today, and I read a lot of what economists say and there's clearly a division between very well-respected economists. Some say the inflation is going to be transitory. Others say it's going to be here for a long time. If they don't know, I certainly don't have much to offer in that respect.

Benz: In our recent research about withdrawal rates, we modeled in a 2.2% inflation rate that came courtesy of our colleagues in Morningstar Investment Management. Is that unrealistically low in your opinion for, say, a 30-year drawdown period? What would you recommend that people use?

Bengen: Well, my research, of course, just uses the historical inflation, whatever it was. If you're trying to project it, I don't think that's unrealistic if the inflation burst we have now is transitory. That's what we're averaging for quite a few years, I believe, for the last decade or more. And some economists seem to think we're still in an environment where oversupply is dominant and deflation forces reassert themselves. So, no, I don't think it's unreasonable. But I have no idea what the actual rate will be over the next 30 years.

Ptak: We take your point on that. All the same, I'm curious to understand how satisfied, I suppose, you are that the Fed and other policymakers can control runaway inflation, if we want to call it that? Are the policy tools for controlling inflation better understood than they were even a few decades ago? And could that make inflation a more fleeting phenomenon than it was in the 1970s?

Bengen: Once again, that's a tough question for a guy like me to answer. I'm not an economist. Obviously, back in the early '80s, we were successful, the Federal Reserve was successful in breaking the back of inflation. And that took Draconian measures to do it. We had two recessions; it drove interest rates up to all-time highs. I Imagine they could do that again. I don't know what other new tools they have that could be added to their arsenal. But if they have to go that route, there's going to be a lot of pain for a lot of people. At that time, I know, the Federal Reserve came under a lot of criticism for what it was attempting to do. And it was amazing they were able to hold steady and not be deterred from their course of action.

Benz: I wanted to ask about how retirees actually spend. The research suggests that retiree spending isn't actually a fixed real withdrawal pattern that retirees do tend to spend less as they age. So, do you think factoring in declining spending is a good course for planners and individuals to use? And would that support a higher starting withdrawal rate? Or is it not a good idea to assume that your spending will trend down later in life?

Bengen: Well, I think that's very much an individual thing. When I think back to my practice now and my clients, and they generally did reduce their travel spending and spending on other items during their later years, but that was offset in part by higher medical expenses and also by their desire to pass on more of their money to their heirs. And I'm doing that myself, even though I'm not spending as much as I did, let's say, five, seven years ago, for personal reasons. I'm trying to give more to my kids. And if you're going to do that, you have to treat that as an expense. And therefore, your withdrawal rate would not be affected. You have to be careful about setting up a scheme, a withdrawal scheme where you take more early in retirement, and then take the less. I think you'd be amazed that how sharply you have to reduce expenses to offset the higher spending rate earlier in retirement. Because once again, everything that occurs in the first five to seven years of retirement has a dramatic effect on what follows. So, if you spend at a higher rate in retirement, you may have to take literally a jump off a cliff later in retirement to reduce your expenses, and it may be uncomfortable to you.

Ptak: And you referenced healthcare costs. I wonder on the flip side how might healthcare costs fit into the discussion of how much someone can safely take out initially? In some ways, it's sort of the inverse of what you were just talking about. How should one think about that in your experience?

Bengen:. What you can take safely out of a portfolio is independent of what you're spending. It depends upon what your experience is in the markets, or what inflation is. So, I don't see how the healthcare costs don't themselves affect your safe withdrawal rate. They obviously affect your expenses and what you would like to withdraw from your portfolio. But beyond that, what you can take out of your portfolio is kind of independent of that.

Benz: You always take pains to note that retirees are all different and that there might be situations when a higher starting withdrawal rate might be appropriate and other situations where a lower one is best. Can you provide examples of each? I think that you have shared examples from your practice where if a client were expecting an inheritance within the next five to 10 years, you might have said, go ahead, take a little more and then in other situations, you might have urged someone to take less early on?

Bengen: Yes, every client situation is different. If you're really sure of your inheritance, and I don't know how anyone can be completely sure of what and when they might be inheriting, then you could make a case for withdrawing more earlier knowing that your cash flows would be enhanced later on. That's kind of a tricky area. You really have to be careful because if you misjudge the situation, you may put a big hole in your retirement portfolio. Somebody lives a lot longer than expected or else they decide to spend all their money on something else. So, it's a tricky area. And I guess the case for lower withdrawal rate was if, down in retirement, you're effectively saving in retirement to buy a major expense, maybe a new home or a large RV to travel a country, then you might want to take lower withdrawals earlier to allow you to save basically, accumulate funds for that major expense, let's say, five, seven years into retirement.

Ptak: There are a number of flexible systems for determining withdrawal rates, basically tethering withdrawal amounts each year to how the portfolio has behaved. Are there any that you particularly like?

Bengen: Jonathan Guyton came up with some great stuff, which I think can be very useful. There's sometimes when you don't know whether you're in a bull market or a bear market. And so, if that's the case, and valuations are kind of in the middle of nowhere, and inflation is fairly typical, you may want to employ a system like that to take care of some of the uncertainty. I'm hoping though that the breakthrough I made last summer where I was able to correlate safe withdrawal rates with inflation and with market valuations, they obviate the need for much of that kind of approach. Because if you have a good solid--I hate to say correct--but something justifiable by history, a safer withdrawal rate, that you won't need to make big adjustments at all, we can kind of ignore what the markets do. I like to think so anyway, but it's good to have multiple strings to your bow.

Benz: Have you gotten feedback from advisors saying that they're incorporating that general thinking, the thought of equity valuations and starting inflation rates as a means of guiding their client-portfolio withdrawals?

Bengen: No. It just shows I am out of touch with a lot of advisors today. I honestly don't know how a lot of them operate. I would hope that they would find that advice useful. But I honestly can't say that. I think part of the problem is it's not yet integrated into any software that advisors use, and advisors heavily rely on software to prepare financial plans. So, I think until it actually becomes an integral part of the software that they use, they may find it awkward to employ it in their practice.

Ptak: I wanted to return to the quandary that we were talking about earlier, which is the combination of low bond yields, a high CAPE ratio, rising inflation. One response to current conditions is that they warrant a more conservative starting withdrawal rate is that dramatically increasing the equity allocation might help since bond yields are low and we know that equities have out-returned bonds in most 30-year periods. Why is a 90% or a 100% equity allocation not advisable for new retirees?

Bengen: Well, historically, it's never worked. It's been dangerous. It actually reduced the safe withdrawal rate. Because if you get into a bear market situation, your portfolio is devastated with that high allocation of stocks. And it deflates it and damages its capacity to support withdrawals. So, I still think something in the middle range, 50 to 60, is good with the exception is that if you're absolutely sure that you're at the start of a bull market. Let's say you're in 1982, and you become optimistic, and you see the CAPE is around 7 and say, "How can this go much lower?" You might want to take a chance and for several years and play a much higher equity allocation, maybe 90 to 100. Because when stocks are that cheap, those allocations are actually relatively safe historically.

Benz: How about the reverse of that where you believe that equity valuations are notably scary? Would it be advisable to potentially take the equity weighting way down with the assumption that you would ramp it up later on?

Bengen: Yes. And essentially, that's what I'm doing in my portfolio. I'm only about 20% equities right now, because I think evaluations are ridiculous. And if you look at the chart of the CAPE, you'll see that when it reaches these peaks, in 1929, and it did so in the mid-60s, and then around 2000, that there was a sharp decline from that. It may take a number of years for it to happen. But it has always happened historically, and I don't know why this would be any different, the current environment. I just can't predict when it will happen. It will be six months, two years, who knows. But I'm a believer that the mean reversion--if we don't have mean reversion, it means we're in a whole new era and that the historical data doesn't mean really that much. So, I guess we'll have to wait and see.

Ptak: With respect to a portfolio's equity allocation, I think you've indicated that diversifying a portfolio's equity sleeve, specifically raising allocations to small- and mid-cap and international stocks, can help lift the portfolio's withdrawal. Is that recommendation based on this particular moment in time when those asset classes appear to be relatively inexpensive by some measures? Or is that more of an evergreen recommendation?

Bengen: It is evergreen. It's broad-brushed across history. I know when I did my original research I employed just two asset classes--U.S. large-cap stocks and Treasuries, intermediate-term Treasuries. That's where I got that 4% or 4.15%. Then, when some years later, I just bought asset class small-cap stocks, it jumped at 4.5%. And it wasn't concentrated on any one period. It raised the withdrawal rates across the spectrum. And then, in my latest research, I added four more asset classes, three of which were stocks, and went from 4.5 to 4.7. So, it looks like we're approaching some kind of diminishing returns here that adding additional asset classes may not generate much more in the way of increases in withdrawal rates. So, I don't know where that point would be. I would suspect somewhere around 5% or so would be about as high as we might get, maybe a little bit beyond.

Benz: I'm curious, have you thrown in any alternative assets into the mix to see what would happen to commodities or anything like that?

Bengen: No, I haven't, primarily because I can't find databases that go back as far as 1926 for these assets. I'm trying to be consistent in using a database that begins in 1926. I sure wish I had stuff like that. But even for something as calling these emerging markets, there are no really reliable databases that go back that far.

Ptak: I wanted to go back to your earlier point. I think you had mentioned that for yourself, your portfolio allocation is skewing heavily toward fixed income because you're having trouble making sense of equity valuations. I would imagine that that sort of allocation might present some challenges to an advisor and his or her client, just because bonds are yielding so little, when they pull down in the portfolio, it means that they're going to have to invade principal, so to speak, to a certain extent. So, in your experience, is there a good way to offer that sort of advice or have that conversation with a client in a situation like that knowing it could be short-term uncomfortable, but long term, the prudent thing to do?

Bengen: I think all I would say is that I'm just glad I'm not managing money professionally for clients today. I just have a lot of respect for what advisors are doing today in probably the most difficult environment in history. I don't know if there are any easy solutions to anything because prospective returns for so many asset classes are so poor. I guess you just do the best you can and warn clients that this is not going to be easy. And advisors, they face career risk. If they don't generate the returns, their clients may leave them. And usually, that happens when markets are about to roll over. I remember I had that in 2000, I had a number of clients leave me because I had been lightening up on stocks. And then, two years later, nobody would come back to me and said, "Oh my goodness, we were devastated. We were all on tech stocks, and they all were destroyed." There was nothing I could do for them. I felt very bad. But I suspect we're going to see a repeat of that story sometime in the next few years.

Benz: I wanted to ask about when people take their withdrawals where they come from. I'm super interested in this topic. What do you think about the idea of varying the withdrawal source based on market conditions? So, you might pull withdrawals from cash and bonds when stocks are down with an eye toward leaving them in place. Does that have the potential to improve sustainable withdrawal amounts, sort of a tactical approach, if you will, to taking withdrawals?

Bengen: I think it happens naturally to an extent anyway. Because if you're rebalancing the portfolio, say, once a year, you're going to be taking most of the money from the asset class that's done the best in effect so that in years in which stocks have done well, most of the money will come from stocks. And vice versa, when bonds have outperformed stocks, most of the money will be coming from bonds presumably. This is a natural consequence of the rebalancing process.

Ptak: Maybe to stick with rebalancing, I think you've indicated you've been doing some research on the role of rebalancing in retirement and that you think rebalancing less frequently than, say, once a year is better. Why is that?

Bengen: The research I did back in 2006—which, I'm going to be revisiting here because I'd like to refine it--indicated that the optimal rebalancing period was probably closer to four to five years. And the reason for it is because stocks are cyclical. There are bull markets and bear markets. And bull markets typically have lasted five years--or in this last one, it's been a lot longer than that--and that if you rebalance too frequently, you're cutting off a lot of the return you might have earned from stocks. When you reduce returns, you also reduce capacity to support withdrawal rates. So, generally, I find out a longer rebalancing period, particularly if you're coordinated where you think you are in a bull and a bear market is beneficial than the standard accepted one-year rebalancing period.

Benz: So, what kind of a cadence do you think makes sense for rebalancing?

Bengen: I would think somewhere between four and five years was the indication I had then. Now, I'm going to take a look at that a little closely to see if that's how much that's dependent on where you started in a stock market cycle. But in 2009, I think you could have expected to wait for five years to rebalance. Turns out you could have waited 10. But five years, waiting five years was a big improvement over rebalancing every year 2010, 2011, 2012, 2013 because stock returns were obviously pretty fabulous during that period of time.

Ptak: From a practical standpoint, in the current era of low yields, a good share of retirees' living expenses will have to come from harvesting appreciated equity holdings, maybe as part of a rebalancing. So, how should retirees thread that needle? They need cash to live on, but you also think they shouldn't be pruning too frequently or aggressively? Or do you think now is the time to be really aggressive because you think that equity sleeve is really overvalued?

Bengen: Well, right now, the equity is the only place that they can get returns to support their withdrawals from. So, I guess, it's going to come from equities primarily, whether we like it or not, no matter what effect that has upon rebalancing or so forth. How long that will continue? I don't know. At some point, we're going to have a big bear market in stocks. And it's possible that it may not be accompanied by a bull market in bonds, possible that bonds and stocks could both decline at the same time, which could be really uncomfortable. And then, you're just going to have to take your money from the portfolio, wherever it is. It's a very uncomfortable time to be doing this kind of thing.

Benz: I asked earlier about whether you had used alternative assets in any of your modeling. How about when you think about your own portfolio, are you attracted to any of those assets as a means of confronting this current environment, whether liquid alternatives or anything like that?

Bengen: I have some holdings in commodities, some holdings in gold, small holding in digital currency, bitcoin. I'm trying to spread my bets out as much as possible. I think diversification is even more important now than it usually is, because so many asset classes are overvalued, we really don't know where the returns are going to come from over the next four or five years.

Ptak: I wanted to talk about your own experience as a retiree. You've been retired for a while now. Can you discuss how you've approached withdrawal rates and asset allocation for your own retirement plan?

Bengen: I retired in 2013. And I used the 4.5% figure then because I thought stock valuations were pretty high even then, but I think compared to what they are today. And that's worked out well. I was reasonably fully allocated up to a couple of years ago--CAPE started getting into the mid-30s and I started to pare it back then. But my withdrawal rate, if you look at how it's evolved, it was at 4.5% in 2013. And if you measure it today, it's around 3.5% because the portfolio has grown significantly during that time, which is nice. It gives you kind of an extra measure of safety in there. I imagine next bear market that will balloon back up to something higher than that. But the last decade has been a boon for retirees, a fabulous experience. It's hard to make a mistake. Don't think it's going to be so easy going forward.

Benz: I wanted to ask about the Great Financial Crisis. You referenced earlier, the 2000 through 2002 period and clients who left and then later regretted that. It sounds like in the 2008 period, you helped your clients avoid the worst of the market losses, but you felt in hindsight that you were a little bit slow in getting them back into stocks. So, what role, if any, should tactical asset allocation play in retirement? And also, I'd like your thoughts on how good advisors are at that practice of tactical asset allocation. We monitor data on professionally managed mutual funds, and we see that a lot of the tactical asset allocators aren't that great at the end of the day. So, why should we think that advisors would do well at that?

Bengen: I use the service, an independent third-party service, to advise me on what I call risk management, what my allocation should be in my portfolio. And I'm even more conservative than that. So, I tend to take their recommendations and pair them down even further for myself to get to my comfort level. But I think advisors themselves would find it difficult, because these matters--risks require a lot of attention. I'd recommend they use some kind of a third-party service and there have been some that have done extremely well. And I think they're really necessary today. Years ago, when I started out as an advisor, I was a buy-and-hold person and saw no reason to do anything different. But as central banks have become increasingly active with monetary policy, and it's caused huge distortions in the economic system and the markets. I don't think retirees can afford to do a buy-and-hold approach anymore. It's just too dangerous. You just can't afford large losses in your portfolio when you're retired. I'd say the primary concern for retirees is protect that nest egg from a devastating loss, because who knows how long it will take to recover just the next time around. It's been pretty resilient the last 20 years, but that's because of extremely active monetary policy by central banks. What happens if that policy is no longer effective? And maybe it will take as long as it did after Great Depression for a portfolio to recover, 20 years or so. That's a scary prospect. So, I think myself that retirees with the help of an outside service or their advisors should be prepared to be more active protecting their nest eggs. That's just my point of view.

Ptak: And that's useful. Do you think that one of the factors here for some advisors is because strategic asset allocation has become almost writ--it's the conventional wisdom that there's a reluctance to stray too far from that? And so, you get kind of this groupthink, where they really are just going to stick to the buy-and-hold approach to which they and their clients have become accustomed?

Bengen: Well, yes, there's a risk for that. I think the environment has changed sufficiently. You have to start looking at it another way. Risk management to me is at the fore of consideration today, not return. So, you need a different approach. And it is uncomfortable, because the buy-and-hold approach was successful for so many years, from the '50s, '60s, '70s, '80s, into the '90s. For 50 years, it wasn't necessary to consider anything else. But I think after having, in the last 20 years, three pretty large bear markets, which had never happened before, and now valuations are threatened, an additional large bear market, and I think it behooves advisors to examine their basic principles and then consider alternatives.

Benz: You mentioned that you use an outside valuation service to help gauge how much risk to take in your portfolio. Can you give a sense of how people should evaluate those types of firms? What should they be looking for to tell if it's a good-quality firm? It seems like there are, frankly, some charlatans in that space. So, how can someone size up whether a firm is worth its salt?

Bengen: I think you have to look at their track record, literally how they performed in all those critical episodes we had--1987, 1992, 2000, 2008, 2020. How successful were they in protecting clients' capital? That's really the bottom line. And they should be able to demonstrate to you that they added value by their risk-management approach. And if the numbers don't add up, then it's just pretty straight cut and dry, they just don't cut mustard.

Ptak: What has been the main surprise for you, financial or otherwise, in your own retirement?

Bengen: How darn did this happen? I had no idea what I was going to really do in retirement. I just knew I wanted to go and put myself in a situation where I could be a better grandfather--my grandson was born just at the time I was retiring, and it's given me a lot of time for him. But in the last eight years, I've written three novels. I haven't gotten any published yet. I've only gotten a thousand rejections. So, I've still got a lot of agents to work through. I've added to my research and the 4% rule. Really, I view what I'm in not as retirement as much as almost a fourth career--I had three earlier careers--and I do have a little bit more time for golf and bridge and tennis than I had before. There's no doubt about it. But still, I'm fascinated by the world and what there is to learn, and I want to continue learning, and that probably is the main focus of my retirement now more than anything else.

Benz: Do you think more retirees should use that model where they're not just doing golf and tennis and bridge but embracing some other hobbies as well? Sounds like you do.

Bengen: I can't take my preferences and suggest other people should do it, because everyone is different. I know folks out here who play golf six days a week, and they enjoy it, they're having a great time, or they play tennis five days a week, and they don't want to be doing what I'm doing. They don't want to hear about it. But I think it's good that everyone have some kind of a strong interest or hobbies they can structure their retirement about, to give their life a pattern. The worst thing you can do is enter retirement in kind of a listless mode, where you don't really know what you want to do or what activities you're going to be involved in. That's dangerous, I think, if you cast yourself a adrift in the seas of retirement, you could drown in them very easily.

Benz: Well, Bill, we want to thank you for taking the time out of your busy retirement schedule to join us today. It's been a real treat for Jeff and me to spend time with you and to chat with you today. Thank you for doing it.

Bengen: Well, it's been a whole lot of fun for me too. Thanks for the opportunity.

Ptak: Thanks again.

Benz: Thank you for joining us on The Long View. If you could, please take a moment to subscribe to and rate the podcast on Apple, Spotify, or wherever you get your podcasts.

You can follow us on Twitter @Christine_Benz.

Ptak: nd @Syouth1, which is, S-Y-O-U-T-H and the number 1.

Benz: George Castady is our engineer for the podcast and Kari Greczek produces the show notes each week.

Finally, we'd love to get your feedback. If you have a comment or a guest idea, please email us at Until next time, thanks for joining us.

(Disclaimer: This recording is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of guests on this program are not necessarily those of Morningstar, Inc. and its affiliates. Morningstar and its affiliates are not affiliated with this guest or his or her business affiliates unless otherwise stated. Morningstar does not guarantee the accuracy, or the completeness of the data presented herein. Jeff Ptak is an employee of Morningstar Research Services LLC. Morningstar Research Services is a subsidiary of Morningstar, Inc. and is registered with and governed by the U.S. Securities and Exchange Commission. Morningstar Research Services shall not be responsible for any trading decisions, damages or other losses resulting from or related to the information, data analysis, or opinions, or their use. Past performance is not a guarantee of future results. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision.)

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