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The 4% rule states you can withdraw 4% of your portfolio in year one, adjusted for inflation annually, with very low risk of running out over a 30-year retirement.
Formula
4% rule: Annual withdrawal = Portfolio × 4% (assumes 30-year horizon, 60/40 stocks/bonds); Adjusted for inflation annually
- Portfolio
- Total retirement portfolio value (Currency)
- Withdrawal%
- Safe withdrawal percentage (Percentage (typically 3–4%))
- Inflation
- Annual inflation adjustment (Percentage)
Guida passo passo
- 1Annual withdrawal = Portfolio × withdrawal rate
- 2$1M at 4% = $40,000/year
- 3Based on US historical data 1926–1994
- 43–3.5% recommended for 40+ year retirements
Esempi risolti
Ingresso
$800k portfolio, 4% rate
Risultato
$32,000/year ($2,667/month)
Domande frequenti
Is the 4% rule safe?
Historically yes (over 30 years, 95% success). But assumes 60/40 portfolio, US history, and moderate spending flexibility. Extend to 50+ years? Lower to 3–3.5%.
What if markets crash in early retirement?
Sequence of returns risk. Big crash year 1 is bad (selling low). Mitigate: keep 2–3 years expenses in cash, be flexible on withdrawal amount, rebalance.
Can I withdraw more in good years?
Yes. Guardrails approach: if portfolio > target, spend more; if < target, spend less. Keeps you disciplined without rigid 4% rule.
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