Saving is a math problem. Spending what you saved is a nerve problem.
For 32 years, you have had one number to settle that nerve. Withdraw 4% of your balance in the first year, adjust it for inflation every year after, and the money is supposed to last three decades.
That number keeps shrinking. The safe starting figure is now 3.9%, according to Morningstar (MORN), which has revised it annually since financial planner Bill Bengen built the original rule in 1994 by running historical market returns through a spreadsheet.
On a $1 million balance, a tenth of a point sounds like rounding. It is $1,000 you do not get to spend in the first year, and less in every year after that.
Money is already voting on the question. Americans bought $123.9 billion of annuities in the second quarter of 2026, an all-time quarterly record and a 4% rise from a year earlier, according to LIMRA.
Jean Chatzky spent most of her career telling you how to save. Her new book, published Sept. 8, tells you how to spend it down, and it opens with a reversal she says she never expected to make.
Chatzky reverses a career-long position
“I used to be an annuity denier,” Chatzky said on the HerMoney podcast, in an episode published Sept. 9.
She described an adviser who once pitched an annuity for her mother. “I shut the guy down cold,” Chatzky said.
She now expects to annuitize roughly 15% to 20% of her own portfolio, she told host Kathryn Tuggle in the same episode.
The book is “The Forever Paycheck,” published Sept. 8 by Avery, an imprint of Penguin Random House, and written in partnership with AARP.
Why the 4% rule keeps shrinking
Bengen’s rule was a backtest. He ran it against historical returns and published it in 1994, and Morningstar has revised the figure every year since, most recently in the 2026 edition released Dec. 2, 2025.
Each revision moves the target you are aiming at, which is what makes the rule hard to plan a life around. A number you have to re-check every December is a forecast wearing a rule’s clothing.
Rising yields rewrote the annuity math
The 30-year Treasury yielded 5.28% on Sept. 9, according to Federal Reserve data published by the St. Louis Fed. The 10-year sat at 4.80% on Sept. 8.
Insurers price lifetime income off those yields, so what your $100,000 buys today tracks where the long end of the curve sits.
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A 65-year-old man buying a single premium immediate annuity with a five-year period certain can get $675 a month per $100,000, according to rate tracker LifeAnnuities.us. A woman the same age gets $637.
When I checked that quote against the March figure on the same tracker, it had climbed from $618, a 9.2% improvement in six months.
Here is the part I keep coming back to. A $675 monthly check is not an 8.1% return. Most of it is your own principal coming back to you, and you hand over the balance to get the guarantee.
The retirement income numbers that matter now
- 30-year Treasury yield: 5.28% on Sept. 9, 2026, per Federal Reserve H.15 data via the St. Louis Fed.
- Morningstar’s 2026 safe starting withdrawal rate: 3.9%
- Best quote for a 65-year-old man, $100,000, life with five-year certain: $675 a month, per LifeAnnuities.us.
- Same quote for a 65-year-old woman: $637 a month, per LifeAnnuities.us.
- U.S. annuity sales in the second quarter of 2026: $123.9 billion, up 4% year over year, per LIMRA.
- Immediate annuities inside that total: $4.0 billion, per LIMRA.
- Average monthly Social Security retirement benefit after the 2.8% 2026 cost-of-living adjustment: $2,071, per the Social Security Administration.
Guaranteed income unlocks actual spending
Chatzky’s case is behavioral before it is financial.
Retirees with annuitized income spend about twice as much as retirees holding the same wealth in savings, according to a June 2024 paper by David Blanchett and Michael Finke published by the Retirement Income Institute, the research arm of the annuity industry group Alliance for Lifetime Income.
“You get a do-over every single month,” Chatzky said of living on steady income.
“We looked at the balances of people 20 years into retirement. They’re not digging into their resources, which means that they’re leaving an awful lot of life and an awful lot of joy on the table,” Chatzky said in the same episode.
The retirement number most people never calculate
Her framework starts one step before any withdrawal rate.
“A lot of people don’t know how much it’s gonna cost them to live in retirement because they don’t really know what it costs them to live today,” Chatzky said.
That is the gap she wants you to close in the decade before you stop working, using your own spending records rather than a generic calculator.
What a guaranteed income layer would cost you
Pull 12 months of bank and card statements and total them. That figure, not a rule of thumb, is your retirement income target.
Subtract your projected Social Security benefit. The average retired worker collects $2,071 a month after the 2.8% cost-of-living adjustment that took effect in January, according to the Social Security Administration.
Whatever is left is what a guaranteed income layer would have to cover, and I ran that arithmetic on a middle-of-the-road budget to see what it takes. If your statements total $6,000 a month and Social Security covers $2,071, you are short $3,929. At $675 per $100,000, buying your way out of that entire gap would take roughly $582,000 of principal.
That is why Chatzky is talking about a slice of a portfolio rather than the whole thing. Her 15% to 20% range is where she landed for her own money, so treat it as a starting point.
Get quotes from more than one A-rated carrier before you sign. Payouts vary by insurer, and the money does not come back once you annuitize.
Your annuity window depends on the Fed
August consumer price index data lands Sept. 11 at 8:30 a.m. ET, and the Federal Open Market Committee meets Sept. 15 and 16.
Markets put the odds of a hike at 59.4% as of Sept. 9, according to centralbank.watch, after August payrolls came in at 162,000 with unemployment at 4.1%, according to the Bureau of Labor Statistics.
A hike would push long yields higher and payouts with them. A cooling inflation print that eventually turns the Fed the other way would make this month’s quotes the best you were ever going to see, which is the uncomfortable part of the trade Chatzky is now making with her own money.
Chatzky has been just as blunt about the accumulation side, including her message on Social Security, 401(k)s and IRAs.
Whichever way the Fed moves next week, the quote you get is fixed on the day you sign, not on the day you decide.
Related: Jean Chatzky says retirees get one big thing wrong about money
