1. What is the 4% Rule?

The 4% rule is a retirement withdrawal strategy that suggests you can withdraw 4% of your portfolio in the first year of retirement, then adjust that amount for inflation each subsequent year, with a high probability your savings will last 30+ years.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Portfolio \) — Total retirement savings balance
• \( 0.04 \) — 4% safe withdrawal rate

Explanation: This calculates your first year's safe withdrawal amount based on the 4% rule of thumb for retirement spending.

3. Importance of the 4% Rule

Details: The 4% rule helps retirees determine a sustainable spending rate that balances current needs with long-term portfolio survival, based on historical market returns.

4. Using the Calculator

Tips: Enter your total retirement portfolio value in dollars. The calculator will show your recommended first-year withdrawal amount.

5. Frequently Asked Questions (FAQ)

Q1: Is the 4% rule guaranteed to work?
A: No, it's based on historical market performance and may need adjustment for different market conditions or longer retirements.

Q2: Should I withdraw exactly 4%?
A: The 4% rule is a starting point. Many factors like age, health, and market conditions may warrant adjusting this percentage.

Q3: Does this include Social Security?
A: No, this calculates only portfolio withdrawals. Social Security would be additional income.

Q4: What asset allocation does this assume?
A: The original studies used a 50-75% stock allocation. Very conservative or aggressive portfolios may require different withdrawal rates.

Q5: Has the 4% rule been updated recently?
A: Some researchers suggest 3-3.5% may be safer for early retirees or in low-return environments, while others argue 4% remains valid.