1. What is the 4% Retirement Rule?

The 4% rule is a retirement planning guideline that suggests retirees can safely withdraw 4% of their portfolio in the first year of retirement, adjusting for inflation each subsequent year, 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:

• Portfolio Value — Total value of retirement savings in dollars
• 0.04 — The 4% withdrawal rate (4/100 = 0.04)

Explanation: The calculation provides the initial safe withdrawal amount that should be adjusted annually for inflation.

3. Importance of the 4% Rule

Details: The 4% rule helps retirees determine a sustainable spending rate from their retirement savings, balancing the need for income with the risk of outliving their money.

4. Using the Calculator

Tips: Enter your total retirement portfolio value in dollars. The calculator will show the recommended first-year 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 market performance and may need adjustment based on future market conditions and individual circumstances.

Q2: Should I withdraw exactly 4%?
A: The 4% rule is a guideline. Some may choose a more conservative 3% or adjust based on market performance.

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

Q4: What if I have other income sources?
A: The 4% rule applies to your investment portfolio. Other income (Social Security, pensions) would be in addition to this amount.

Q5: Is the 4% rule still valid today?
A: While debated, it remains a common benchmark, though some experts suggest adjusting it based on current market valuations.