1. What is the 4% Withdrawal Rule?

The 4% rule is a common retirement withdrawal strategy that suggests retirees can withdraw 4% of their portfolio in the first year of retirement, then adjust that amount annually for inflation, with a high probability their savings will last 30 years.

2. How Does the Calculator Work?

The calculator uses a simple formula:

Where:

• Portfolio Value — Total value of your 401k/retirement savings
• Withdrawal Rate — Percentage you withdraw annually (typically 3-5%)

Explanation: This calculation shows how much you can withdraw annually from your retirement savings based on your chosen withdrawal rate.

3. Importance of Withdrawal Rate

Details: Choosing an appropriate withdrawal rate is crucial for ensuring your retirement savings last throughout your lifetime while maintaining your desired standard of living.

4. Using the Calculator

Tips: Enter your total retirement portfolio value and your preferred withdrawal rate (4% is the traditional recommendation, but you may adjust based on your circumstances).

5. Frequently Asked Questions (FAQ)

Q1: Is the 4% rule still valid today?
A: While still a useful guideline, some experts suggest a more conservative 3-3.5% withdrawal rate in today's low-yield environment.

Q2: How does inflation affect withdrawals?
A: The 4% rule assumes you increase withdrawals annually by inflation to maintain purchasing power.

Q3: What if my portfolio grows during retirement?
A: Some strategies allow for flexible withdrawals that increase when markets perform well.

Q4: Should I use the same rate for all retirement years?
A: Many financial planners recommend a "glide path" approach with lower rates early in retirement.

Q5: How does asset allocation affect withdrawal rates?
A: More conservative portfolios may require lower withdrawal rates, while balanced portfolios may support higher rates.