4% Rule Portfolio (Bengen 50/50): backtest, returns and drawdowns
Fifty percent large-company stocks and fifty percent intermediate Treasuries, the mix behind the 4% withdrawal rule.
Data updated October 2026
Created by: William Bengen (1994)
Allocation
| Asset class | ETF used in the backtest | Weight |
|---|---|---|
| S&P 500 | IVV | 50% |
| Intermediate US Treasuries | IEF | 50% |
- Stocks 50%
- Bonds 50%
From October 2011 to October 2026 the 4% Rule Portfolio (Bengen 50/50) returned 8.4% a year on average, with annual volatility of 8.2%. Its deepest fall was 20.8%, from December 2021 to October 2022, recovered in about 29 months.
Its best year was 2019 (+19.6%) and its worst 2022 (−16.7%).
Over the same period 100% US stocks returned 14.3% a year with a maximum fall of 35.0%.
Key figures
- Annual return (CAGR)
- +8.4%
- Annual volatility
- 8.2%
- Maximum drawdown
- −20.8%
- Recovery time
- 29 months
- Sharpe
- 0.84
- Sortino
- 1.19
- Worst year
- 2022: −16.7%
- Positive years
- 12/14
Growth of $10,000
Drawdowns
Returns by calendar year
| Year | 4% Rule Portfolio (Bengen 50/50) | 60/40 Portfolio | 100% Stocks |
|---|---|---|---|
| 2026(partial) | +4.9% | +6.9% | +12.7% |
| 2025 | +12.9% | +13.0% | +17.0% |
| 2024 | +12.2% | +14.8% | +23.8% |
| 2023 | +15.1% | +17.9% | +26.1% |
| 2022 | −16.7% | −16.9% | −19.5% |
| 2021 | +12.7% | +14.6% | +25.7% |
| 2020 | +14.2% | +15.4% | +20.7% |
| 2019 | +19.6% | +21.9% | +30.7% |
| 2018 | −1.8% | −3.1% | −5.3% |
| 2017 | +12.2% | +14.2% | +21.4% |
| 2016 | +6.6% | +8.3% | +12.1% |
| 2015 | +1.4% | +0.2% | −0.1% |
| 2014 | +11.3% | +9.7% | +12.2% |
| 2013 | +13.1% | +18.2% | +31.8% |
| 2012 | +9.9% | +10.4% | +14.7% |
| 2011(partial) | +3.5% | +3.1% | +4.1% |
History
- Created by
- William Bengen
- Who
- Financial planner, originator of the 4% rule
- Year
- 1994
- Source
- “Determining Withdrawal Rates Using Historical Data”, Journal of Financial Planning (1994)
- Funds in the backtest
- 2
In 1994 financial planner William Bengen tested, with US market data back to 1926, how much a retiree could withdraw each year – raising the amount with inflation – without running out of money within 30 years. With 50% large-company stocks and 50% intermediate Treasuries, about 4% of the starting value lasted in every period he tested: the origin of the “4% rule”.
Bengen later found that holding between 50% and 75% in stocks gave the best results and, adding small-company stocks, raised his own estimate to about 4.5%. The portfolio tested here is the original 50/50 mix.
Strengths and weaknesses
Strengths
- The mix behind the best-known retirement rule
- Treasuries cushion stock market crashes
- Two funds
Weaknesses
- Half in bonds limits growth
- Hurt when rates rise quickly
- Only US large caps on the stock side
How it works
The portfolio Bengen used to find the highest yearly withdrawal that survived every 30-year period in US history.
Backtest with total-return ETF prices (dividends reinvested), rebalanced to target weights on the first trading day of each year. Where a Vanguard fund has a short price history in our data, an iShares fund on the same market is used (for example ITOT for VTI, IVV for VOO). No fees, taxes or currency effects; first and last years are partial. Past results do not predict future returns.
Questions
Who created the 4% Rule Portfolio (Bengen 50/50)?
William Bengen (financial planner, originator of the 4% rule), 1994. Source: “Determining Withdrawal Rates Using Historical Data”, Journal of Financial Planning (1994).
What is the 4% Rule Portfolio (Bengen 50/50)?
Fifty percent large-company stocks and fifty percent intermediate Treasuries, the mix behind the 4% withdrawal rule. Allocation: 50% s&p 500, 50% intermediate us treasuries. Created by: William Bengen (1994).
What is the 4% Rule Portfolio (Bengen 50/50) return?
In the backtest from October 2011 to October 2026 it returned 8.4% a year on average, with a maximum drawdown of 20.8%. US dollars, before fees and taxes.
How often should it be rebalanced?
The backtest rebalances once a year back to the target weights. Rebalancing more often changes little and adds costs; some investors rebalance only when a weight drifts beyond a threshold.
What was the worst drawdown of the 4% Rule Portfolio (Bengen 50/50)?
20.8%, from December 2021 to October 2022; it took about 29 months to get back to the previous high.
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Source: MarketStack end-of-day prices. Historical and educational content: not a forecast and not investment advice. MEDGE Capital does not recommend buying or selling any instrument. Risk disclaimer.