Here’s What Your Retirement Spending Rate Should Be in 2026

Most retirees want to spend as much as they can without having to worry about running out of money.

Why it matters: Morningstar’s State of Retirement Income research analyzes retirement spending strategies to determine the highest safe starting withdrawal rate for new retirees in 2026. Christine Benz, Morningstar’s director of personal finance and retirement planning and co-host of The Long View podcast, breaks down the research and shares some ideas about how you can boost your retirement spending.

14 Questions on Retirement Income and Safe Withdrawal Rates

1. Each year, you and your colleagues produce this really comprehensive research about retirement income. And as part of that research, you try to identify what a safe withdrawal rate will be for the year ahead. What is that safe withdrawal percentage, and how did you arrive at that conclusion?
2. The 4% rule often comes up in the conversation around retirement spending. How does that compare to your base case?
3. I know there are some misperceptions about your retirement income research and what that safe withdrawal percentage means. What are they?
4. So, how should retirees use this research?
5. The safe starting withdrawal rate that you found in your base case might feel a little low for some retirees. Are there other strategies that retirees can use to boost their spending?
6. So, flexible strategies are best suited for retirees that are focused on maximizing their spending. What kind of retiree would benefit from a more rigid strategy, like the fixed inflation-adjusted spending approach that you use in your base case?
7. How does asset allocation come into play? Would a stock-heavy portfolio support a higher withdrawal rate in retirement?
8. So far, we’ve focused on portfolio income strategies, but you also looked at nonportfolio income sources like annuities and Social Security. What did you find?
9. It seems like there’s some more nuance to the suggestion of delaying Social Security. Can you talk about that?
10. How about annuities? Can you discuss some of the key considerations that income-centric retirees should bear in mind?
11. Studies have found that retirees don’t actually spend the same amount over the course of their retirement. What does actual retirement spending tend to look like, and how might that affect a retiree’s plans?
12. Let’s talk about some scenarios that can throw off a retiree’s plan. One might be a market downturn early in retirement. What kind of impact could that have on spending?
13. Another scenario might be retiring earlier than expected. What kind of implications would that have for safe withdrawals?
14. What is one final takeaway from the research that you want retirees to come away with?

Key Quote on Retirement Income and Safe Withdrawal Rates

The idea is to look holistically at retirement income, because, thankfully, most of us aren’t just bringing our retirement portfolios into retirement. We also have some nonportfolio assets. So for most of us, that will be Social Security. For some people, it will be a pension plus Social Security. And so we wanted to explore the interplay with these different withdrawal strategies and the nonportfolio income sources. If people are willing to explore enlarging their nonportfolio income sources, if they’re willing to delay Social Security, possibly buy some type of an annuity, that makes everything easier with respect to portfolio withdrawals.

The Takeaway: Don’t just take that 3.9% and run with it. You probably can and should enlarge your spending if you are willing to be flexible. Benz urges people to take a close look at their budgets as they embark on retirement. New retirees should look at those things that they could potentially rein in a little bit if they needed to, and then give themselves permission to spend a little bit more in those good years for the market and their portfolios.

More From Morningstar on Retirement Income and Safe Withdrawal Rates

The headline safe starting withdrawal rate shouldn’t necessarily be your main takeaway from the research. Morningstar’s State of Retirement Income report can help you prepare for retirement by illustrating the role nonportfolio income, like Social Security and annuity payments, can play and comparing different portfolio withdrawal strategies that might align with your spending needs.

Confused about how to apply the research to your own situation? Learn more about how to use Morningstar’s retirement income research, even if you’re already retired.