What is the 4% Rule and Who Created It?
The 4% rule is a retirement withdrawal guideline developed by American financial advisor Bill Bengen in the 1990s. It is based on a historical study of returns from portfolios composed of 50% stocks and 50% bonds in the United States. The rule suggests that if a retiree withdraws 4% of their initial portfolio in the first year and adjusts that amount annually for inflation, their capital should last at least 30 years. Bengen published his findings in 1994, and it has since become a cornerstone of the FIRE (Financial Independence, Retire Early) movement. However, Bengen himself has qualified his rule in recent interviews, warning that early retirees may be “fooling themselves” if they apply the rule without adjustments, especially in contexts of low expected returns or longer retirement horizons.
Practical Cases: Leif Dahleen and José Elías
Two media examples illustrate different approaches to financial independence. Leif Dahleen, who retired at age 43, explains in a Rankia article how he achieved his goal through aggressive saving, diversified investing, and controlled spending. Meanwhile, businessman José Elías popularized the so-called “€200,000 rule” in an interview with ABC, arguing that with that capital and a 10% annual return, one can live without working. However, this claim has been criticized for ignoring inflation and assuming non-guaranteed returns. Both cases show that financial independence is possible, but require realistic planning and a deep understanding of market and longevity risks.
Bengen’s Criticisms and Current Adaptations
Bill Bengen, in an interview with Diario AS in December 2026, warned that many early retirees underestimate the length of their retirement and market volatility. “Early retirees may be fooling themselves,” he noted. The original 4% rule was designed for a 30-year horizon, but someone retiring at 40 may need their portfolio to last 50 years or more. Therefore, some experts propose lower withdrawal rates, such as 3% or 3.5%, especially in an environment of low interest rates and high valuations. An analysis by Fintualist published in November 2026 suggests that in emerging economies like Mexico, the rate could be 6% or 7% due to higher inflation and nominal returns, but this increases risk. In any case, the rule is not a magic formula but a guide that must be personalized according to risk tolerance, wealth, and spending expectations.
The Spanish Context: Pensions and AIReF
In Spain, the debate on financial independence intersects with the sustainability of the public pension system. The Independent Authority for Fiscal Responsibility (AIReF) has confirmed compliance with the pension spending rule, but warns that long-term sustainability has not improved. This reinforces the need to supplement the public pension with private savings and investment. The 4% rule can be a reference for those planning early retirement, but always considering the Spanish fiscal and inflationary context. Additionally, it is crucial to diversify into global assets and not limit oneself to domestic equities. Financial independence is not just about accumulating capital, but about managing risk and having a contingency plan for unforeseen events.
Sources and Methodology
This article has been prepared from verified journalistic sources: the Rankia article on Leif Dahleen, the ABC interview with José Elías, Bill Bengen’s statements in Diario AS, the AIReF report on pensions in Spain, and Fintualist’s analysis of the 4% rule in Mexico. We also consulted the interview with Homo Investor in El Blog Salmón. The methodology involved extracting key facts and contrasting them with general financial literature on the 4% rule. No personalized advice is offered, nor are returns guaranteed. For more information on our analysis process, see our methodology and data sources. Some technical terms are explained in our glossary.
Disclaimer: Informational content. Does not constitute financial advice.