1. What is the 4% Rule?

The 4% rule is a retirement withdrawal strategy that suggests you can safely withdraw 4% of your portfolio in the first year of retirement, adjusting for inflation each subsequent year, with a high likelihood your money will last 30 years.

2. How Does the Calculator Work?

The calculator uses the simple 4% rule formula:

Where:

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

Explanation: This calculates your first year's safe withdrawal amount based on historical market performance and inflation data.

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 estimated safe annual withdrawal amount.

5. Frequently Asked Questions (FAQ)

Q1: Is the 4% rule guaranteed to work?
A: No, it's based on historical market performance (1926-1976) and may need adjustment for different market conditions.

Q2: Should I withdraw exactly 4%?
A: Many experts now suggest 3-3.5% for early retirees or during poor market conditions.

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

Q4: What portfolio composition is this based on?
A: The original study used a 50-75% stock allocation with the rest in bonds.

Q5: How should I adjust for inflation?
A: After the first year, increase your withdrawal amount by the inflation rate each year.