1. What is the 4% Withdrawal Rule?

The 4% rule is a common 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 money will last 30 years.

2. How Does the Calculator Work?

The calculator uses the simplified 4% rule formula:

Where:

• 4% — The safe withdrawal rate based on historical market returns
• Portfolio Value — Your total retirement savings balance

Explanation: This conservative estimate aims to balance sustainable withdrawals with portfolio longevity.

3. Importance of Withdrawal Rate Calculation

Details: Calculating an appropriate withdrawal rate helps prevent outliving your retirement savings while providing sustainable income throughout retirement.

4. Using the Calculator

Tips: Enter your total retirement portfolio value in dollars. The calculator will show the annual amount you could withdraw following 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 for future conditions or longer retirements.

Q2: Should I adjust for inflation each year?
A: The classic 4% rule includes annual inflation adjustments, but some prefer flexible withdrawal strategies.

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

Q4: What asset allocation is this based on?
A: The original studies used a 50-75% stock allocation with the remainder in bonds.

Q5: Are there alternatives to the 4% rule?
A: Yes, some prefer dynamic withdrawal strategies or guardrail approaches that adjust based on portfolio performance.