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 likelihood your savings will last 30 years.

2. How Does the Calculator Work?

The calculator uses a simple formula:

Where:

• Portfolio Value — Your total retirement savings
• Withdrawal Rate — Percentage to withdraw annually (typically 3-5%)

Explanation: This simplified version calculates how much you can withdraw annually and monthly based on your portfolio size and 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 portfolio value and desired withdrawal rate (4% is the default). The calculator will show both annual and monthly withdrawal amounts.

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: Does this account for taxes?
A: No, this is a pre-tax calculation. Your actual spendable amount may be less depending on your tax situation.

Q3: Should I adjust withdrawals for inflation?
A: The classic 4% rule includes annual inflation adjustments, but this simplified calculator doesn't model that.

Q4: What if my portfolio value changes?
A: This is a static calculation. In reality, you may want to adjust withdrawals based on portfolio performance.

Q5: Does this work for early retirement?
A: For retirements longer than 30 years, you may need a lower withdrawal rate or more flexible strategy.