Retirement Calculator · Practical guide
What Is the 4 Percent Rule for Retirement?
Withdraw 4% in year one, adjust for inflation after that — and a balanced portfolio has historically lasted 30 years.
At a glance
The Rule in One Sentence
The 4% rule says you can withdraw 4% of your retirement portfolio in the first year, then increase that dollar amount each year to keep pace with inflation, with a high historical probability of the money lasting at least 30 years. On a $1 million nest egg, that is $40,000 in year one, or about $3,333 per month.
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Retirement Calculator
Enter your own values, then compare the result with the examples below.
Retirement Projection
Income by Portfolio Size
| Portfolio at Retirement | Annual Income (4%) | Monthly Income |
|---|---|---|
| $500,000 | $20,000 | $1,667 |
| $750,000 | $30,000 | $2,500 |
| $1,000,000 | $40,000 | $3,333 |
| $1,250,000 | $50,000 | $4,167 |
| $1,500,000 | $60,000 | $5,000 |
| $2,000,000 | $80,000 | $6,667 |
The Reverse: The 25x Rule
Flip the rule around to set a savings target: multiply the annual income you need from your portfolio by 25. Needing $50,000 per year from savings means a target of $1.25 million. If Social Security covers $25,000 of a $75,000 spending plan, your portfolio only needs to supply $50,000 — and the 25x math sizes it for you.
Where the Rule Came From, and Its Limits
The rule comes from William Bengen's 1994 study of historical US stock and bond returns, which found that a 4% inflation-adjusted withdrawal survived every 30-year period in the data, including the Great Depression. It assumes a balanced portfolio (roughly half stocks) and steady inflation adjustments. It is a planning guideline, not a guarantee: many retirees withdraw a fixed percentage of the current balance instead, spending a bit less after bad market years. The calculator above shows both the 4% income your projected savings would provide and a year-by-year simulation of how long the fund actually lasts at your chosen spending level.
Frequently Asked Questions
Does the 4% rule include Social Security?
No. The 4% rule only sizes the income your portfolio provides. Social Security, pensions, and annuities are added on top, which reduces what your savings must generate.
Is 4% still safe with today's markets?
Researchers debate whether lower bond yields and high stock valuations argue for 3.5% or so as a safer starting rate. The historical record still supports 4%, but conservative planners often build in a margin.
What portfolio does the rule assume?
Bengen's original work used a mix of roughly 50-75% US stocks with the rest in intermediate-term government bonds. Very conservative or very aggressive allocations change the safe withdrawal rate.
What happens if I retire right before a market crash?
That is sequence-of-returns risk, the main danger to the 4% rule. Withdrawing from a falling portfolio locks in losses, which is why many retirees keep one to two years of expenses in cash or use flexible spending in down years.