What This Calculator Does
The 4% rule is one of the most trusted retirement guidelines out there. Here’s the simple idea: withdraw 4% of your portfolio in your first year of retirement, then increase that dollar amount each year to keep up with inflation—no matter what the market does.
This tool crunches the numbers for you and shows:
- Your first year’s withdrawal — both annual and monthly amounts
- Your final year’s withdrawal — adjusted for inflation over time
- Your projected ending balance — what’s left after your retirement years
The Math Behind It (Made Simple)
First year withdrawal = Your total portfolio × 4% (or whatever rate you choose)
Every year after = Previous year’s withdrawal × (1 + inflation rate)
Portfolio balance update = (Previous balance − withdrawal) × (1 + expected return)
Real-Life Examples
Example 1: The Classic 4% Approach
| Input | Your Numbers |
|---|---|
| Portfolio Value | $1,000,000 |
| Withdrawal Rate | 4% |
| Inflation Rate | 3% |
| Expected Return | 6% |
| Retirement Years | 30 |
| Your First Annual Withdrawal | $40,000 |
Example 2: Playing It Safer with 3.5%
| Input | Your Numbers |
|---|---|
| Portfolio Value | $750,000 |
| Withdrawal Rate | 3.5% |
| Inflation Rate | 2.5% |
| Expected Return | 6% |
| Retirement Years | 35 |
| Your First Annual Withdrawal | $26,250 |
Who Is This Calculator For?
You’ll find this tool especially helpful if you’re:
- Nearing retirement and wondering what your annual budget could look like
- Already retired and checking if your current withdrawals are sustainable
- Pursuing FIRE (Financial Independence, Retire Early) and stress-testing a longer retirement horizon
- A financial planner looking for a quick, clear way to model client scenarios
Common Questions About the 4% Rule
What exactly is the 4% rule?
It’s a simple retirement guideline: withdraw 4% of your portfolio in year one, then increase that dollar amount by inflation each year. Historically, this approach has given retirees a strong chance of making their money last 30 years.
Is the 4% rule still safe today?
Many experts still use it as a solid starting point. That said, some now recommend a more conservative rate—around 3% to 3.5%—given today’s market conditions, longer lifespans, and lower expected returns. Others prefer a flexible approach that adjusts withdrawals based on portfolio performance.
Does my withdrawal amount change over time?
Yes—under the classic rule, your withdrawal dollar amount goes up each year with inflation. This keeps your purchasing power steady, regardless of how your investments perform.