4% Rule Calculator
The 4% rule suggests withdrawing 4% of your portfolio in year one of retirement, then adjusting for inflation annually.
What Is the 4% Rule?
The 4% rule states that you can withdraw 4% of your starting portfolio in year one of retirement, then adjust that amount annually for inflation, with a high probability of your money lasting 30+ years. It's the foundation of FIRE planning — and the source of the 25x formula for calculating your retirement number.
The rule comes from the 1998 Trinity Study by finance professors Cooley, Hubbard, and Walz at Trinity University, who analyzed historical US market data from 1926-1995. Their finding: a 4% initial withdrawal rate from a 50-75% stock portfolio had a 95%+ success rate over every 30-year period in the historical dataset.
Withdrawal Rate Comparison
| Rate | Multiplier | Portfolio for $50k/yr | Portfolio for $80k/yr | Best for |
|---|---|---|---|---|
| 5% | 20× | $1,000,000 | $1,600,000 | Short retirement, guaranteed income |
| 4% | 25× | $1,250,000 | $2,000,000 | 30-year retirement horizon |
| 3.5% | 28.6× | $1,429,000 | $2,286,000 | 35-45 year retirement |
| 3% | 33× | $1,650,000 | $2,640,000 | 50+ year early retirement |
How to Use This Calculator
Enter your portfolio size and adjust the withdrawal rate to match your timeline. The calculator shows your Year 1 annual and monthly income, plus the inflation-adjusted withdrawal amount at your chosen retirement duration — useful for understanding how much more you'll need to withdraw in nominal dollars decades from now.
Making the 4% Rule More Robust
Cash buffer strategy: Keep 1-2 years of expenses in cash outside your portfolio. During market downturns, spend from cash rather than selling investments at depressed prices. This eliminates most sequence-of-returns risk.
Flexible spending: In bad market years, reduce discretionary spending by 10-15%. Research shows flexible spenders can use 4.5-5% rates with success rates equivalent to 3.5% fixed withdrawal.
Related: FIRE Number Calculator — use the same withdrawal rate to calculate your retirement target.
Frequently Asked Questions
Does the 4% rule work for early retirement (retiring at 40)?
Not perfectly. The Trinity Study modeled 30-year retirements. For 40-50 year horizons, success rates drop. Most FIRE practitioners retiring in their 30s or 40s use 3-3.5% as a safer withdrawal rate, accepting a larger required portfolio in exchange for dramatically higher portfolio durability.
Should I include Social Security in the 4% rule calculation?
Yes — subtract expected SS income from annual expenses before calculating your portfolio target. If you need $65,000/year and expect $18,000/year from SS, only $47,000 needs to come from the portfolio: $47,000 × 25 = $1,175,000 vs. $1,625,000 without SS.
What happens if my portfolio runs dry?
In the small percentage of historical scenarios where a 4% rate failed over 30 years, portfolios ran out in the final 5-10 years — manageable with part-time work, spending cuts, or delayed Social Security claiming. It's a risk, not a certainty, and flexible spending strategies reduce the risk substantially.
Is the 4% rule still valid given current market valuations?
Some researchers (notably Wade Pfau) suggest 3-3.5% is more appropriate given elevated current valuations. Using 3.5% adds a meaningful safety margin without requiring a dramatically larger portfolio. The cash buffer and flexible spending strategies further improve real-world outcomes beyond what the fixed withdrawal model suggests.