How this calculator works
The math is deliberately simple: annual income = portfolio × withdrawal rate. The 4% figure comes from the “Trinity study” line of research, which found that a 4% initial withdrawal — adjusted for inflation each year — survived most 30-year historical periods in a stock/bond portfolio. Later research on more recent decades suggests 3%–3.5% is prudent for early retirements or low bond returns.
Example calculation
A $1,000,000 portfolio at 4% supports $40,000 a year ($3,333 a month) before tax. At 3.5%, $35,000; at 5%, $50,000 — a rate at which the money has historically run short more often, especially over 35+ year retirements.
Common mistakes to avoid
- Treating 4% as guaranteed — it is a historical survival rate, not a promise.
- Ignoring sequence-of-returns risk: bad early years do damage a good average can't undo.
- Forgetting taxes and investment fees, which come out of the same withdrawal.
Assumptions and limitations
This is a static rule-of-thumb tool. It does not model market returns, inflation adjustments, taxes, fees, healthcare or long-term-care costs, or dynamic withdrawal strategies (guardrails, floor-and-ceiling). Use it for sizing conversations, then test real scenarios in a year-by-year tool.
Frequently asked questions
Is the 4% rule still safe?
It's a starting point, not a guarantee. The rule comes from historical US market data where a 4% inflation-adjusted withdrawal survived most 30-year retirements. More recent research — with two big downturns, low bond yields, and longer retirements — suggests 3%–3.5% is prudent, especially for anyone retiring before 65. Stress-testing your plan at 3.5% is the practical takeaway.
What is a good withdrawal rate for a 40-year retirement?
Research on long horizons generally lands between 3% and 3.5%. Every extra decade raises the risk that a bad early sequence of returns depletes the portfolio; lower starting rates, holding cash buffers, or flexible 'guardrails' spending all reduce that risk. This calculator shows multiple rates side by side for exactly this comparison.
Does my withdrawal rate include taxes?
No — the figures are gross portfolio withdrawals. Taxes depend on which accounts the money comes from: Roth withdrawals are tax-free, traditional withdrawals are ordinary income, and taxable accounts owe capital gains rates. The Roth conversion planner on this site models those interactions year by year.