1. What is the 4% Pension Withdrawal Rule?

The 4% rule is a common retirement withdrawal strategy that suggests you can withdraw 4% of your pension savings annually (adjusted for inflation) without running out of money for at least 30 years.

2. How Does the Calculator Work?

The calculator uses the simple 4% rule formula:

Where:

• Total Pension — Your total retirement savings in dollars
• 0.04 — The 4% withdrawal rate (4/100 = 0.04)

Explanation: This calculation gives you the safe annual withdrawal amount from your pension savings.

3. Importance of the 4% Rule

Details: The 4% rule helps retirees balance between withdrawing enough to live comfortably while ensuring their savings last throughout retirement. It's based on historical market returns and inflation data.

4. Using the Calculator

Tips: Enter your total pension amount in dollars. The calculator will show your recommended annual withdrawal amount based on the 4% rule.

5. Frequently Asked Questions (FAQ)

Q1: Is the 4% rule guaranteed to work?
A: No, it's based on historical data and doesn't guarantee future results. Market conditions may require adjustments.

Q2: Should I withdraw exactly 4% every year?
A: The original rule suggests starting at 4% and adjusting for inflation each year, but some prefer flexible withdrawals based on market performance.

Q3: Does the 4% rule account for taxes?
A: No, the withdrawal amount is pre-tax. You'll need to account for taxes separately.

Q4: Is 4% appropriate for all retirement lengths?
A: It was designed for 30-year retirements. For longer retirements, a lower initial withdrawal rate may be more appropriate.

Q5: How does investment allocation affect the 4% rule?
A: The rule assumes a balanced portfolio (typically 50-75% stocks). More conservative allocations may require lower withdrawal rates.