June 2026

Donna Cournoyer In Reading Recommendations

Reading Recommendation: A Richer Retirement

Bill Bengen was a financial planner in the early 1990s who confronted the question that often puzzles aspiring retirees: “When I get to retirement, how much can I spend?”

For his baby boomer clients at the time, there was little expert guidance on the subject. Bengen decided to investigate himself, and in 1994 published his findings in the Journal of Financial Planning under the title Determining Withdrawal Rates Using Historical Data.

The article demonstrated that a 4% initial withdrawal rate from a tax-advantaged account had never failed to allow the account to last for at least 30 years, based on data going back to 1926. And thus, the “4% Rule” was born.

Bengen continued to refine his research. His 2025 book, A Richer Retirement: Supercharging the 4% Rule to Spend More and Enjoy More, argues for a new “4.7% Rule”.

Importantly, Bengen reminds retirees that inflation is their “greatest enemy” and emphasizes that retirees must consistently adjust their withdrawals for the higher cost of living.

Bengen’s book is foundational for financial planners and will be of interest to individuals who want to explore the research behind the 4% Rule.

Bengen was recently interviewed by Morningstar, and you can listen to the discussion on the May 19 episode of Morningstar’s The Long View podcast.

Donna Cournoyer In College Planning

You Got the Bill for College – Now What?

That envelope (or email) from the college bursar’s office is coming. Maybe it’s already sitting in your inbox. And if you’ve never seen a college tuition bill before, the first reaction is usually some version of shock — even when you know well ahead of time that the number was coming.

So let’s talk about what to do before you just write the check.

First, Understand What You’re Actually Looking At

A college billing statement isn’t always straightforward. You’ll see tuition, room and board, fees — but you’ll also see credits for financial aid, scholarships, and loans.

Before you do anything, make sure the aid package you were promised is actually reflected on the bill.

Missing scholarships or grants happen more than you’d think, and a quick call to the bursar’s (or business) office can save you thousands. Many bills are confusing. Ask if you don’t understand what you are looking at.

Second, Think Before You Tap That 529

If you have a 529 plan, this is the moment you’ve been saving for — but timing matters. A few things to keep in mind:

Distributions need to match qualified expenses in the same calendar year to stay tax-free
Room and board counts — but only up to the school’s published cost of attendance figures
If your student received a scholarship, you could withdraw that same amount from the 529 with no penalty — though the earnings portion may still be subject to income tax
Be sure the funds go directly from your custodian to the student’s account with the bursar at the college

Third, Consider the Payment Plan

Most schools offer an installment payment plan — typically spreading the semester bill over 4-6 months for a small enrollment fee (usually $50-100). In my experience, this is one of the most underused tools in college financing.

Why pull a lump sum from investments or a 529 all at once when you can spread it out and keep your money working a little longer?

Or, see if there is any room in your monthly income to make payments in place of a loan (or lower your loan). This can be a significant savings, yet many families often look at financing as “all or nothing.”

When you actually have the option, choose a payment plan that fits your budget and allows you to make regular payments to the college out of your monthly cash flow. It is wise to do so if you are able and lower any debt you may be considering as often your 529 is not going to cover the balance for four years.

Finally, Don’t Ignore the Loans Conversation

If federal loans are part of your plan, they don’t just appear — your student needs to accept them through the financial aid portal.

They also have documents to sign such as a promissory note required for the funds to be disbursed to the school. It sounds obvious, but I’ve seen families miss disbursements simply because no one clicked “accept.”

Check that box now and have your student watch for emails from financial aid on documents needed.

Think about this: the families who navigate college costs most successfully aren’t always the ones with the most money. They’re the ones paying attention in June and July, before the bill is actually due.

So take action NOW so you are prepared and ready for fall – and enjoy some relaxing time with your college student who is home for summer!

-DC

Donna Cournoyer In Financial Planning

How Much Can You Spend in Retirement?

Two of the more common questions Susan, Donna, and I hear as planners are of vital importance for those thinking about their financial future are:

“How do I know if I have enough saved for retirement?”
“How much can I safely spend each year without running out of money?”

These are questions without a simple universal answers. But there are two powerful tools that can help: the 4% rule, a well-known rule of thumb rooted in decades of research, and a personalized probability of success analysis, which we build for our clients using financial planning software.

In this article, we want to explain both measures — where each comes from, what it can tell you, and how they can work together to give you a more complete picture of your retirement readiness.

The 4% Rule: A Historically-Grounded Starting Point

The 4% rule was developed in 1994 by financial planner and researcher William Bengen, who set out to answer a question that no one had systematically studied before: what is the maximum amount a retiree can withdraw each year without running out of money?

Rather than guessing about future market returns, Bengen turned to history.

He studied the actual investment returns and inflation data for every quarter going back to January 1926, and reconstructed what would have happened to someone who retired on a specific date, withdrew a set percentage of their savings in their first year, then adjusted that dollar amount for inflation every year thereafter — similar to how Social Security’s cost-of-living adjustment works.

Bengen studied hundreds of historical retirees, asking: what is the highest withdrawal rate that would have worked for all of them, including those who retired at the worst possible moments in market history?

Results of Bengen’s Study

The answer: 4% (and with a more diversified portfolio, up to 4.7%). A retiree who withdrew 4% of their starting portfolio value in year one, then adjusted that dollar amount for inflation each subsequent year, would have maintained their portfolio for at least 30 years regardless of when in history they retired — through the Great Depression, the stagflation of the 1970s, the dot-com crash, and the 2008 financial crisis.

In plain terms, a retiree with $1,000,000 in savings could withdraw $40,000 in their first year. If inflation ran at 3% that year, they would take $41,200 in year two, and so on. According to this framework, they would not have run out of money over a 30-year retirement, even in the worst historical environments.

Here’s something important that often surprises people: the 4% rule was calibrated to the single most difficult retirement outcome in nearly a century of data — a retiree who started in October 1968 and faced both a severe bear market and a prolonged period of high inflation. That one cohort ended their 30-year retirement with essentially nothing left.

For virtually every other retiree in history following the same 4% rule, portfolios not only survived — they grew.

Many retirees ended their 30 years with substantially more wealth, in real terms, than they started with. The long-run average across all historical retirees was closer to 7%, meaning most people could have withdrawn nearly double the 4% rate without running out of money.

What the 4% Rule Does Well

Grounded in real history, not assumptions about the future
Provides a quick, memorable benchmark: ff you’re withdrawing less than 4% of your savings each year, you’re in a strong position historically speaking
Reflects actual worst-case scenarios — the kinds of markets and inflation environments that genuinely tested retirees

What It Doesn’t Capture

Bengen himself is clear that the rule was never meant to be a universal prescription and that treating it as one is itself a problem. Because the rule is calibrated to a single worst-case cohort, applying it universally causes most retirees to spend far less than they safely could.

In a recent Morningstar interview, Bengen described the 4% rule as applying only to a very narrow set of circumstances — specifically, retirees facing both high inflation and very high stock market valuations simultaneously — and stressed that most people can do considerably better with a personalized approach.

Beyond the underspending risk, your retirement situation is unique in ways the 4% rule doesn’t account for:

Your tax situation. Withdrawals from taxable accounts are subject to capital gains and income taxes that can meaningfully reduce your spending power — potentially requiring a more conservative withdrawal rate.
Your timeline. If you retire at 60 and live to 95, you need your money to last 35 years, not 30. A longer time horizon calls for a lower initial withdrawal rate.
Your specific goals. Whether you intend to leave an inheritance, cover long-term care costs, or adjust your spending significantly over time all affect what’s appropriate for you.
Current market conditions. Bengen’s research shows that safe withdrawal rates are closely tied to stock market valuations. With today’s market valuations on the higher end of the historical range, the future may look somewhat different than the historical average.

A Note on Inflation

Bengen calls inflation “the greatest enemy of retirees”.

Unlike a market downturn, which typically recovers, sustained high inflation forces retirees to take larger and larger withdrawals over time – accelerating the depletion of their savings.

This is one reason why we pay close attention to inflation trends in general, and specifically for your financial plan. It’s also why a regular review of your plan is recommended.

Probability of Success: Your Personalized Financial Plan

While the 4% rule provides a useful starting point, your financial plan is designed to go much further — and its central metric (in the RightCapital financial planning software that we use with our clients) is called the Probability of Success.

How It Works

The Probability of Success represents the percentage of simulated futures in which your plan does not run out of money during your lifetime.

Here’s how it’s calculated: The software runs 1,000 separate simulations of your financial future. Each simulation uses a different random sequence of investment returns and inflation rates, all drawn from historical market behavior.

One simulation might reflect a scenario similar to the 1970s stagflation; another might mirror the strong markets of the 1990s; another might look like a prolonged downturn shortly after you retire.

After all 1,000 simulations are complete, the software counts how many ended with money still in your plan. If 870 out of 1,000 simulations ended with a positive balance, your Probability of Success is 87%.

What Score Should You Be Aiming For?

We typically target a Probability of Success in the range of 80% to 90% for our clients. Here’s why we find that range to be an appropriate outcome:

A score above 90% is a sign of strength, but it can also indicate that you’re spending less than you could comfortably afford. If your score is very high, it may be worth discussing whether you could increase your spending, give more to family or charity, or retire earlier.
A score between 80% and 90% means your plan is well-positioned. It has weathered the most stressful simulated environments with a strong success rate.
A score between 70% and 80% suggests the plan could benefit from some adjustments — whether to spending levels, savings, retirement timing, or portfolio allocation.
A score below 70% is a signal that more significant changes may be needed.

A plan that succeeds in 100% of simulations is typical one that is very conservative, often meaning you’re spending significantly less than history suggests you could.

We recognize that for some clients, this level of conservatism is preferable. For those clients who have plans with the strongest outcome, though, thinking more expansively about approaches to spending may also merit consideration.

What Makes Your Score Go Up or Down?

Your Probability of Success is driven by the specific details of your plan, including:

Your annual retirement spending. This is typically the most powerful lever. Modestly reducing planned spending can meaningfully improve the score; increasing it has the opposite effect.
When you retire. Delaying retirement by even a year or two can improve the score significantly, both by extending the savings period and by shortening the distribution period.
Your portfolio allocation. The mix of stocks, bonds, and other assets affects both expected returns and the volatility of those returns across simulations.
Sources of guaranteed income. Social Security, pensions, and annuities all reduce the amount your portfolio needs to provide and tend to improve the score.

How These Two Tools Work Together

The 4% rule and your Probability of Success analysis are not competing measures, rather they complement each other, and each is better suited to a different stage of the planning conversation.

Think of the 4% rule as a compass. Before you’ve built your full financial plan, it can quickly orient you: is your situation in the right ballpark?

A prospective retiree withdrawing 3% of their savings annually has significant flexibility; one withdrawing 7% faces real constraints under almost any methodology. That early directional read is genuinely useful.

Your financial plan — and its Probability of Success — is the detailed map.

Once we know your full picture, including your income sources, taxes, goals, timeline, and spending patterns, we can build a plan that reflects your life, not a historical generalization. The probability score becomes the primary measure we track and revisit together over time.

What Both Measures Agree On

Despite using different methodologies, these two approaches are grounded in the same body of evidence about financial markets and inflation.

Bengen himself notes that his historical approach and Monte Carlo simulation generally produce similar conclusions — which is reassuring, since they’re studying the same underlying dynamics.

Both measures also point to the same warning signals:

A sustained rise in inflation is the condition most likely to require a meaningful reduction in withdrawals. Unlike a temporary bear market, persistent inflation continuously forces higher withdrawals, accelerating portfolio depletion.
A significant market decline early in retirement can have an outsized impact on the long-term health of a plan — which is why we pay special attention to portfolio construction and risk management in the years just before and after retirement.

What This Means for You

Our goal in building and maintaining your financial plan is to give you clarity and confidence — the freedom to spend, give, and live in retirement without unnecessary anxiety about money.

One of the most important things that a personalized plan can reveal is that you might have more flexibility than a simple rule of thumb suggests. Both the 4% rule and your Probability of Success are tools in service of that goal.

Here’s what we recommend for our clients:

Review your plan at least annually. Markets change, your spending changes, and your goals evolve. Your Probability of Success should be re-evaluated regularly in light of these changes.
Don’t panic at temporary market declines. History shows that most bear markets recover, and plan adjustments made in the heat of a market downturn often do more harm than good. We’ll help you assess whether any action is truly needed.
Take inflation seriously. If the inflation environment changes meaningfully, it’s worth a conversation about your withdrawal plan.
Think about your full-time horizon. Many people underestimate how long their portfolio may need to last. We encourage our clients to build in a margin of safety by planning for a longer retirement than average life expectancy.

If you’d like to review your current Probability of Success, discuss your withdrawal strategy, or simply talk through how your plan is positioned for the environment ahead, we’d love to hear from you. That’s exactly what we’re here for.

-RK

Donna Cournoyer In Market Updates

May 2026 Market Recap: The Everything Rally

ASteve Sosnick, the chief market strategist at Interactive Brokers, referred to financial market activity in May as “the Everything Rally.” That’s not a bad way to frame what happened last month.

At the start of the month, investors were confronted with an unsigned Iran peace deal, oil above $100, inflation at a three-year high, a brand-new Federal Reserve chair, and a 30-year Treasury yield touching its highest level since 2007.

May closed with Technology sector posting another double-digit monthly gain. The S&P 500 index of large company US stocks rose 5.3% and closed at record highs on 11 days during the month. Foreign stocks gained more than 2.4%, and bond indices (despite large intra-month swings in yields) registered modest positive returns.

May was defined by three themes: the Iran war and its economic consequences; AI delivering broad-based, positive revenue trends in the technology sector; and a bond market that tested investor nerves.

The Iran War — Deal Always “Just Around the Corner”

The U.S.-Iran conflict is now in its fourth month. The Strait of Hormuz remained largely closed to commercial traffic, with only a handful of ships transiting daily versus 120 before the war.

Oil prices swung dramatically on diplomatic signals: Brent crude peaked near $126 in late April, fell toward $87 by month-end, then traded at various points in between as headlines shifted from hope to frustration and back again.

The month’s diplomatic arc was a recurring pattern: a constructive signal would arrive, sending oil sharply lower and stocks higher — only to be followed by a complication. By month-end, the memorandum of understanding between the US and Iran remained unsigned, and June opened with the same central question May had posed: when will a deal be signed?

The economic consequences of the conflict were visible throughout the month. Inflation hit 3.8% year-over-year — its highest since 2023 — driven heavily by energy. National average gas prices remained above $4.50 per gallon for most of the month.

And Goldman Sachs and Barclays both cautioned that even if the Strait fully reopened tomorrow, global oil inventories are so depleted that prices likely would normalize only gradually, not immediately.

Artificial Intelligence Delivers Positive Revenue Trends

April validated that AI is driving positive financial results for chip makers. May confirmed that AI demand is broadening into other areas of the technology ecosystem.

Some examples of how AI-driven demand is benefiting tech companies:

Dell Technologies, which many folks associate with personal computers, reported AI server revenue up 757% year-over-year, a record $51.3 billion AI order backlog, and raised its full-year revenue forecast by roughly $27 billion.
Cisco, another “old-line” technology-focused company, known for its networking gear that supports internet activity, raised its full-year AI order guidance to $9 billion — nearly double what it had guided just one quarter earlier.
Nvidia, the new tech standard bearer that designs chips, and also hardware networks to power data centers as well as specialized software, reported $81.6 billion in quarterly revenue — up 85% year-over-year — and guided its next quarter to $91 billion.
Cerebras Systems, which delivers supercomputer systems and cloud-based services, listed its shares through the largest tech initial public offering (IPO) since Uber went public in 2019, saw its shares surge 68% on the first day of trading.

The broader AI narrative for the month was captured well by one market analyst: “We started with chips and memory, but it’s really now about the broad AI infrastructure stack.”

And more AI-related activity is in store for investors in the months ahead, with SpaceX, Anthropic (maker of Claude) and OpenAI (maker of ChatGPT) all expecting to list their shares through IPOs and being trading on stock market exchanges later this year.

The Bond Market’s Warning

Not everything pointed straight up in May.

The bond market delivered a warning mid-month that temporarily interrupted the equity rally. The 30-year Treasury yield approached 5.2% in mid-May – its highest level since 2007, before the financial crisis – and the 10-year Treasury yield approached 4.7% (though bond yields did decline in the back half of May).

The main driver of higher yields was the Iran war’s inflationary impact on energy prices globally. The practical consequence for US households: 30-year fixed mortgage rates climbed back to 6.68%, putting further pressure on an already-stalled housing market.

Adding to the complexity, Kevin Warsh took over as Federal Reserve Chair on May 15, inheriting a divided institution with inflation running well above its 2% target.

The probability of a Fed rate hike in 2026, which was essentially zero a month ago, climbed as high as 45% during the month. Warsh’s first formal interest rate policy decision comes June 16.

Despite the swings in yields, benchmark US bond indices delivered positive returns in May. High quality bonds returned 0.3% for the month, and low quality bonds rose 0.5%.

As June begins, the questions that defined May remain open. The Iran deal is unsigned. Inflation remains elevated. The new Fed chair faces his first policy decision with rate-hike odds that would have seemed unthinkable a few months ago.

And yet the stock market enters June at all-time highs, with US Large Company Stocks up 11.2% for the year and Foreign Stocks up 9.1%. Whether the optimism that has driven the fourth consecutive year of stock market gains (so far) proves durable is the central question for the months ahead.

Here are results for May and 2026 Year-to-Date, compared to longer-term annualized returns (10-Year Trailing):

Note: YTD 2026 as of 5/31/2026; Source: Morningstar

-RK