Safe Withdrawal Rate UK: Beyond the 4% Rule
The 4% rule is American. The maths was built on the S&P 500. Run the same numbers on UK data and the safe withdrawal rate is closer to 3.2%. That's 20% less retirement income.
Annual income from a £500,000 pot at different SWRs
UK long-run equity returns trail the US, so the same pot supports less income.
Key takeaways
The 4% rule, popularised for US retirees, does not apply to UK retirees due to differences in market returns, tax treatments, and inflation patterns.
UK equities have historically delivered lower returns compared to US equities, making a 4% withdrawal rate risky for UK retirees.
UK tax structures differ significantly from US tax systems, affecting how long retirement funds last.
A safe withdrawal rate for UK retirees is estimated to be between 3% and 3.5% based on Okusanya's analysis using UK and global market data.