How Much Can I Draw from My Retirement Income Without Running Out?

Tuesday, February 03, 2026

Planning how much to live on in retirement can feel like a balancing act. On one hand, you want to enjoy the fruits of your labour—travel, hobbies, and a comfortable lifestyle. On the other hand, you don’t want to wake up one day at 85 and realise your savings have run dry.

Traditionally, there has been a guideline for how much you can safely withdraw from your retirement nest egg each year without depleting it too soon, and this has been around 4%. The idea came from a U.S. study in the 1990s called the Trinity Study, which looked at how different withdrawal rates and investment mixes performed over decades.

Here’s how it works: in your first year of retirement, you withdraw 4% of your total savings. For example, if you have $500,000 saved, your first-year withdrawal would be $20,000. In subsequent years, you increase that amount slightly to keep up with inflation, so your spending power stays roughly the same over time.

How this fits with Australian super

In Australia, the government sets minimum drawdown rates for account‑based pensions, starting at 4% and rising with age. For example, the minimum is 4% under 65, then higher percentages as you move through your 60s, 70s and beyond. These rules currently mean (in 2026) that later in life you would be required to withdraw more than 4% from super, even if you’d prefer to stick to the classic rule.

At the same time though, many retirees also receive some Age Pension, which effectively tops up their income and can make a slightly higher drawdown from super more manageable. If your investments earn, say, 6–7% before inflation and you only draw 4–5%, your balance may still grow over time, especially in good market years.

Why 4%?

The number 4% wasn’t pulled out of thin air. It’s based on historical data showing that, through market ups and downs, a balanced portfolio of shares and bonds could support withdrawals at roughly this level for around 30 years. That’s a comfortable time frame for most retirements.

Of course, markets never behave perfectly. Inflation might be higher than expected. Interest rates might stay low for years.

Consider the guideline of 4% more like a traffic sign saying, “Suggested Speed Limit.”
You then personally adjust depending on road conditions. For example:

If you experience great returns during a period of market highs, you might allow yourself a little more.
Also, your spending needs and withdrawals may vary each year

The retirement rules of Australia and the inevitable year to year market variations is where an experience financial planner is absolutely essential to guide you every step of the way through your retirement journey. This will require regular reviews of your investment portfolio, lifestyle needs and the changing landscape of your retirement.

The goal isn’t just to preserve capital—it’s to make your money work for you in a way that feels sustainable and stress-free.

A simple, flexible game plan

At Maher Digby Securities, we tailor your retirement income plan to your needs within a realistic view of what’s achievable. We meet with you twice a year to take another look at your financial situation and make any adjustments necessary.

While the 4% guideline is a helpful compass for retirees navigating how much is safe to withdraw, every retiree’s situation is unique. Your personal spending needs, investment strategy, and comfort with risk, will all play a role. The key is to stay flexible, review regularly, and adjust your withdrawals in relation to the conditions of the day.

After all, retirement isn’t just about preserving money—it’s about enjoying the freedom you’ve worked so hard to achieve.

For more Information contact Mark Digby at Maher Digby Securities Pty Ltd - Financial Advisers – AFSL No. 230559. This document was prepared without taking into account any person’s particular objectives, financial situation or needs. It is not guaranteed as accurate or complete and should not be relied upon as such. Maher Digby Securities does not accept any responsibility for the opinions, comments, forward looking statements, and analysis contained in this document, all of which are intended to be of a general nature. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend consulting a financial advisor.