Safe Withdrawal Strategy After Retirement: Drawing Down Without Running Out

Where the "4% rule" comes from

The 4% rule originated from US research (the "Trinity study" and William Bengen's work), suggesting a retiree could withdraw 4% of their portfolio in year one, adjust that amount for inflation each year after, and have a high probability of the corpus lasting 30 years - based on over a century of US market data.

Why it doesn't transplant cleanly to India

• Much higher average inflation: India's CPI inflation has historically run considerably higher than the 2-3% typical of the US, directly eating into a fixed real withdrawal amount faster.
• A much shorter market history to rely on: India's Sensex only goes back to 1979 - a few decades of data, not the century-plus the original US research drew on.
• A less stable historical return pattern, adding more sequence-of-returns risk (see our glossary entry) to any fixed early withdrawal rate.
• Potentially longer retirements: rising life expectancy means a 60-year-old today may need a corpus to last 30+ years, not the 30-year assumption itself being generous headroom.

What Indian-context research suggests instead

Recent India-specific studies and simulations point to a materially lower starting withdrawal rate - commonly in the 2.5% to 3.5% range, rather than 4%, as more realistic for Indian retirees given the factors above.

(Recommended withdrawal-rate range checked as of September 2026, based on current Indian-context retirement research - this is an evolving area of study, not a fixed rule like a government-notified interest rate.)

The practical takeaway

Treat the "4% rule" as a US-specific starting point, not a number to import directly - a more conservative starting withdrawal rate, reviewed periodically against actual portfolio performance and inflation, better fits India's higher-inflation, shorter-market-history environment.