1. What is the 4% Rule?

The 4% rule is a retirement withdrawal strategy that suggests you can withdraw 4% of your retirement savings annually, adjusted for inflation, with a high probability your funds will last 30 years or more.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Explanation: This calculation determines a sustainable annual withdrawal amount from your retirement savings based on historical market performance and inflation data.

3. Importance of the 4% Rule

Details: The 4% rule helps retirees balance spending needs with the risk of outliving their savings. It provides a guideline for sustainable withdrawals while maintaining portfolio longevity.

4. Using the Calculator

Tips: Enter your total 401k balance in dollars. The calculator will show your estimated safe 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 market performance and may need adjustment based on future market conditions and individual circumstances.

Q2: Should I withdraw exactly 4% every year?
A: The original rule suggests adjusting the initial amount by inflation each year, but some experts recommend flexible withdrawal strategies.

Q3: Does the 4% rule account for taxes?
A: No, the calculated amount is pre-tax. You'll need to account for taxes on withdrawals from tax-deferred accounts.

Q4: Is the 4% rule still valid today?
A: With lower expected returns, some experts suggest a more conservative 3-3.5% withdrawal rate, especially for early retirees.

Q5: What if my retirement lasts longer than 30 years?
A: You may need to adjust your withdrawal rate downward or have other income sources to supplement your retirement savings.