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4% rule calculator
The 4% rule (Trinity Study) lets you withdraw 4% of your portfolio in year one of retirement and adjust for inflation each year, with ~95% historical success over 30 years.
The 4% rule, in plain English
Year 1: withdraw 4% of your starting portfolio. Year 2: that same dollar amount, adjusted up for inflation. Repeat annually. Historical backtests (Bengen 1994, Trinity Study 1998) found this works for 30-year retirements with ~95% success on a 50/50 to 75/25 stock/bond portfolio.
On a $1.5M portfolio: year 1 withdrawal = $60,000. Year 2 with 3% inflation = $61,800. Year 3 = $63,654. Continue.
Annual withdrawal by portfolio size
| Portfolio | 3% (very safe) | 3.5% (FIRE-safe) | 4% (standard) | 5% (aggressive) |
|---|---|---|---|---|
| $500k | $15k | $17.5k | $20k | $25k |
| $1.0M | $30k | $35k | $40k | $50k |
| $1.5M | $45k | $52.5k | $60k | $75k |
| $2.0M | $60k | $70k | $80k | $100k |
| $3.0M | $90k | $105k | $120k | $150k |
When 4% fails
- Sequence-of-returns risk: bad early years deplete the portfolio before recovery
- 40+ year retirements: 95% success drops to 85% over 50 years — use 3.25–3.5% for early retirement
- Heavily bond-tilted portfolios: too little equity to outpace inflation long-term
- Inflexible spending: can't cut back in bad market years
4% Rule Calculator FAQ
Where does the 4% rule come from?
Bill Bengen's 1994 paper analyzed every rolling 30-year retirement starting 1926–1976. He found 4% inflation-adjusted withdrawal from a 50/50 stock/bond portfolio survived all historical 30-year windows. The Trinity Study (1998) confirmed it with similar methodology.
Is the 4% rule still valid in 2026?
Debated. Critics note current high valuations and low bond yields could compress future returns. Defenders cite 100+ years of robust data including the Great Depression, '70s stagflation, and 2008. Conservative planners use 3.5% for safety; aggressive ones stick with 4%.
What's the difference between 4% rule and 25× rule?
Same thing, different framing. 4% withdrawal from a portfolio = portfolio is 25× annual spending (1 / 0.04 = 25). The 25× rule is forward-looking ('build a portfolio 25× your spending'); the 4% rule is the withdrawal phase ('take out 4% per year').
Should I really use 4% for a 50-year retirement?
Probably not. Historical success drops to 70–85% over 50 years at 4%. For very long retirements (FIRE at 40), use 3.25–3.5% (28–31× spending). The portfolio target gets harder but the failure risk gets much smaller.
Does the 4% include taxes?
The 4% is the gross withdrawal — taxes come out of that. If you withdraw $60k from a Traditional IRA at 22% marginal rate, net spending is ~$47k. Plan your gross withdrawal to cover after-tax needs. Roth withdrawals avoid this tax drag.
What if I can spend flexibly in bad years?
Flexibility raises success rate dramatically. If you can cut spending 10–20% in down years (skip travel, defer big purchases), success goes from 95% to ~99%. This 'guardrails' approach (Guyton-Klinger) lets you use 4.5–5% withdrawal in good times.