The Money Ed Won’t Touch

Ed’s wife wanted to go to Italy. She’d been talking about it for two years. She found the flights, picked the hotels, even mapped out a route from Rome to the Amalfi Coast.

Ed said no. Not because they couldn’t afford it. Because the number in his brokerage account might go down.

Ed retired three years ago with a little over $1.2 million saved. His Social Security covers his basics. His house is paid off. He has no debt. And his portfolio has actually grown since he quit working.

But he won’t spend the money he saved because he’s afraid it’ll run out.

I told him he was wrong. He didn’t believe me until I showed him the math.

He’s not alone. A lot of guys are making the same mistake.

Every retirement article you’ve ever read warns about the same thing: running out of money. Save more. Spend less. Be careful.

For a lot of guys who did it right, that advice worked too well.

The Employee Benefit Research Institute tracked household assets over thirty years. Their finding: roughly one in three retirees reaches their mid-80s with 100% of their original savings still intact — or more. They didn’t spend it down. They barely touched it.

A separate survey by Allianz found that 39% of retirees refuse to draw down their savings at all. They just want to keep the balance where it is.

Think about that. These are guys who saved for thirty or forty years so they could live a certain kind of life. And now they won’t live it because they’re scared of a number on a screen going down.

The financial world has a name for this. They call it underspending risk. And for well-prepared retirees, it’s more common than going broke.

In 1994, a financial planner named Bill Bengen asked a simple question. How much can a retiree pull from their portfolio every year without going broke over thirty years?

He tested every rolling 30-year period going back to 1926. Every war, every crash, every boom. He asked what would have happened if you retired in the worst possible year and pulled a steady amount adjusted for inflation.

His answer: about 4%. On a million-dollar portfolio, that’s $40,000 a year.

That number became gospel. Financial planners printed it on pamphlets. Websites built calculators around it. Guys like Ed memorized it and treated it like a speed limit.

The problem is that 4% was never meant to be a ceiling. It was a floor — the absolute worst case, the bare minimum that survived even the ugliest stretch of market history.

And now even the guy who invented it says it’s too low.

In August 2025, Bengen published a book called A Richer Retirement. After thirty more years of data and a much broader set of investments, he updated his number.

The new floor is 4.7%. Under normal conditions, he says the real number is closer to 5% or even 5.5%.

Here’s what that means in real money. On a $1 million portfolio, the old rule said take $40,000 a year. Bengen’s updated number says $47,000. That’s $7,000 more every year you’re leaving on the table if you stick with the old number.

Over twenty years of retirement, that gap adds up to $140,000. That’s the trip to Italy. That’s dinners out with your wife. That’s the stuff you saved for.

Bengen’s update is based on a broader portfolio than the original — not just big U.S. stocks and bonds, but mid-caps, small-caps, international stocks, and cash. He tested about 400 different starting years and found that the worst-case scenario still holds at 4.7%.

Bengen himself called the old 4% rate “too stingy for the current market.”

Here’s what bugs me about the underspending problem. The cost isn’t just financial. It’s the life you don’t live.

It’s the trips you skip. The dinners you don’t go to. The grandkids you don’t visit because you’re too busy watching a number on a screen.

That’s not prudent. That’s fear dressed up as planning.

Nobody gets a trophy for being the richest guy in the graveyard.

The EBRI data shows the other side too. About one in five retirees who started with over $500,000 had burned through most of it by their mid-80s. That’s a real risk, and it’s worth planning for. But the planning industry focuses almost all its energy on that group. It ignores the much larger crowd of guys who are hoarding money they earned and deserve to use.

I’m not a financial planner, and I told Ed that up front. But I’m a guy who’s been through the same math with his own portfolio, and here’s the framework I gave him.

Three steps. Simple enough to do on a napkin.

▸ Figure out your floor. Add up your fixed income — Social Security, any pension, annuity payments. That’s what covers your basics no matter what the market does. Ed’s Social Security handles his mortgage-free living expenses with room to spare.
▸ Apply the updated rate to your portfolio. Take 4.7% of your invested savings. That’s your first-year withdrawal. On Ed’s $1.2 million, that comes to about $56,000. Each year after, you adjust it up for inflation. If your portfolio is more conservative, Morningstar says 3.7% to 3.9% is still safe.
▸ Spend the difference on purpose. Whatever your withdrawal covers above your basics — that’s your life money. Trips, gifts, experiences, dinners. Not rainy-day money. Not emergency money. Money you are allowed to use.

This isn’t about being reckless. It’s about giving yourself permission to spend what you already earned. If the guy who invented the rule says you can take more, maybe listen to him.

We sat down on a Saturday with a piece of paper and a cup of coffee. Ran through the three steps. Took about twenty minutes.

Ed’s Social Security covers his fixed costs with about $800 a month left over. His portfolio, at 4.7%, gives him another $56,000 a year to work with. That’s almost $4,700 a month on top of what he already has coming in.

He stared at the number for a long time. Then he picked up his phone and called his wife.

They booked the trip that afternoon. Rome, the coast, twelve days. He told me later it was the best money he ever spent. His only regret was waiting two years to do it.

The whole point of saving is to eventually spend. If you’ve done the work, give yourself the reward.

Run the numbers. Do it this weekend. You might find out you’ve been richer than you thought.

— Walter