Walkthrough
What happened to people who retired in 1966?
Retiring in 1966 meant 16 years of high inflation and flat stock prices. It’s the start year that set the 4% rule. Here’s how three plans fared over the next 30 years.
Starting with $1,000,000 and spending $40,000 a year (rising with inflation), a fixed plan ran out in 1991.
- Fixed spending
- Guardrails
- Guardrail buckets
| Plan | Money left (1995) | Lowest balance | Lowest yearly spending | Spending cuts | Years sold right after a drop |
|---|---|---|---|---|---|
| Fixed (4% rule style) | Ran out in 1991 | $0 | Ran out | 0 | 10 |
| Guardrails | $309,456 | $272,917 | $32,000 | 3 | 11 |
| Guardrail buckets | $574,679 | $354,927 | $32,000 | 3 | 6 |
What this means
A 1966 retiree with $1,000,000 spending $40,000 a year (4.0%) went through the high inflation of the late 1960s and 1970s. With fixed spending, the plan ran out in 1991.
Guardrails cut spending 3 times, never below $32,000, and ended with $309,456. Guardrail buckets drew from cash in down years, so they sold investments right after a decline 6 times, compared with 10 times for the fixed plan.
This is one start year. To see how the same plan did across every start since 1928, use the calculators linked below.
Why 1966 was so hard
There was no single crash. Instead, stock prices went sideways for 16 years while inflation rose from about 3% to over 12%. A retiree’s spending, raised with inflation every year, kept climbing while the portfolio’s real value fell. Bonds didn’t help much either: they lost value after inflation through most of the 1970s.
This slow squeeze is why William Bengen’s original research found that roughly 4% was the highest rate that survived every 30-year period. The late 1960s set the limit.
What would have helped
- A slightly lower start. Try 3.5% above: the difference compounds over 30 years.
- Modest spending cuts. Guardrails trimmed spending a few times in the 1970s and kept the plan going far longer.
- Inflation protection. Social Security rises with inflation, and Treasury inflation-protected securities (TIPS), which didn’t exist then, do too.
Assumptions
- Fixed and guardrail plans hold 60% stocks. Guardrail buckets keep 4 years of withdrawals in Treasuries and invest the rest 80% in stocks.
- Guardrails cut spending 10% if the withdrawal rate rises 20% above where it started and raise it 10% if it falls 20% below, with a floor at 80% of starting spending.
- Actual S&P 500, 10-year Treasury, T-bill and CPI figures for 1966–2025. Amounts in today’s dollars, before taxes and fees.
New to a term? See the retirement income glossary.
Common questions
Did people who retired in 1966 run out of money?
With a fixed 4% withdrawal and a balanced mix, our data shows the money running out in the early 1990s, about 26 years in. Guardrails or a slightly lower starting rate made it last the full 30 years.
Why is 1966 the worst year to retire?
It combined a long stretch of flat stock prices with the high inflation of the 1970s, so withdrawals rose every year while the portfolio shrank in real terms.
Could 1966 happen again?
A long stretch of high inflation and weak returns is possible. That’s why many retirees keep some flexibility in spending rather than counting on average returns.
Related tools
How we calculate this
We run three plans through the actual years since your start date: fixed inflation-adjusted spending, guardrails on the withdrawal rate, and guardrail buckets (guardrails plus a cash bucket refilled only near market highs).
Data: S&P 500 total returns, 10-year Treasury and 3-month Treasury bill returns as compiled by Aswath Damodaran (NYU Stern), and CPI-U inflation from the U.S. Bureau of Labor Statistics, 1928–2025 (2025 preliminary). Read the full methodology and limitations.