Current and forward-looking market conditions mean that retirees should be withdrawing less than the 4% standard from their retirement portfolios, reports CNBC.

The 4% rule refers to the traditional amount that a retiree should plan on being able to withdraw from their entire investment portfolio and live on in the first year of retirement and the dollar amount that increases with inflation each year. It’s a way of calculating how much income someone would need to have saved and have invested heading into retirement so that they can live comfortably for 30 years, withdrawing at a predetermined rate.

Current market conditions are offering up smaller returns from stocks and bonds, and as such, Morningstar researchers have arrived at 3.3% as a new, realistic number. That may sound like a small difference, but over the span of 30 years, accounting for inflation, it can mean a difference of tens of thousands of dollars in annual living expenses suddenly missing.

Seniors and retirees have generally enjoyed positive market growth over the last few decades, with low inflation, low bond yields, and strong performing stocks leading to good returns. These market conditions are not anticipated to continue, as bonds are “highly unlikely to enjoy strong gains over the next 30 years,” according to the report, and long-term inflation is expected to be higher overall.

There are some exceptions to the updated 3.3% rule; that this only refers to income from investments and doesn’t take into account outside sources such as pensions or Social Security. It’s also built around a very conservative estimate and approach of ensuring with 90% probability that an individual doesn’t run out of money within 30 years.

Individuals who are more comfortable with higher risk and weathering the odds of less money long-term should things go wrong, as well as those who don’t anticipate living into their 90s, could afford to withdraw more money annually.

The new 3.3% rule is also predicated on the assumption that income needs would be consistent over the years and that spending habits wouldn’t alter in changing market conditions. This isn’t necessarily the case, as research has shown that seniors tend to alter their retirement spending over the years.

Withdrawing in larger amounts can also have long-term effects on the ability of the portfolio to perform. The sequence-of-returns means that if a retiree begins retirement by withdrawing larger sums, particularly in markets that are providing diminished returns, they run the very real risk of running out of money down the road. Less money in the portfolio gives it less flexibility to recover and capture growth when markets rebound and investments begin to provide higher returns again.

For more news, information, and strategy, visit the Retirement Income Channel.