Guided Spending Rates: Rethinking "Safe" Initial Withdrawal Rates

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Are traditional withdrawal rules, such as the 4% rule, still the best guide for retirement spending?

PGIM's Guided Spending Rates provide a practical starting point for retirement income planning by incorporating spending flexibility, guaranteed income sources, dynamic spending adjustments, and a more realistic assessment of retirement outcomes. Rates are updated quarterly based on PGIM Capital Market Assumptions.

Guided Spending Rates - As of Fourth Quarter, 2025

Guided Spending Rates - As of Fourth Quarter, 2025

Flexibility
Level 		Retirement Period (Years)
40 35 30 25 20 15 10
Conservative 3.6% 3.9% 4.4% 5.0% 6.0% 7.6% 10.9%
Moderate 4.3% 4.6% 4.9% 5.5% 6.4% 8.0% 11.3%
Enhanced 4.9% 5.2% 5.6% 6.1% 7.0% 8.6% 11.9%

Source: Author’s calculations using return assumptions from PGIM’s Capital Market Assumptions as of Q4 2025.

Conservative

For retirees relying on portfolio assets to fund essential spending.

Moderate

Balances essential and discretionary retirement spending needs.

Enhanced

For retirees with greater spending flexibility.

WHY GUIDED SPENDING RATES?

Guided Spending Rate Benefits

  • Spending Flexibility

    Retirees can adjust spending over time.

  • Guaranteed Income Matters

    Social Security and other lifetime income sources provide a foundation for retirement spending.

  • Beyond Success/Failure

    Outcome quality matters—not just whether a goal is fully achieved.

Guided Spending Rates framework

The research behind PGIM's Guided Spending Rates framework explores spending flexibility, guaranteed income sources, and retirement outcome metrics to develop a more realistic approach to retirement income planning. The methodology is updated regularly and serves as the foundation for the quarterly rates shown above.

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