What is the 4% rule for retirement?
The 4% rule says you can withdraw 4% of your portfolio in year one of retirement, adjust for inflation each year, and have a 95%+ probability your money lasts 30 years. It comes from William Bengen's 1994 research, later confirmed by the Trinity Study (1998).
Formula
Safe Annual Withdrawal = Portfolio Value × 0.04
Example
$1,500,000 portfolio × 4% = $60,000/year in retirement income (inflation-adjusted). After 30 years, historically you'd still have money left in 95% of scenarios.
How it works in detail
Bengen analyzed every 30-year period in US market history (1926–1994) and found that a 4% initial withdrawal rate never ran out of money with a 50%+ stock allocation. The 'rule' is really a guideline — it assumes US-heavy equities, 30-year retirement, and no spending flexibility. For early retirees planning 40–50 year retirements, research by Pfau and Kitces suggests 3.25–3.5% is more appropriate. Dynamic withdrawal strategies (reducing spending in down markets) can safely support 4.5–5%.
Calculate your safe withdrawal amount with our free 4% rule calculator
Open Free Calculator →Related Questions
How much do I need to retire?
Multiply your annual spending by 25. If you spend $60,000/year, you need $1,500,000. This is the 4% rule from the Trinity Study (1998) — withdraw 4% annually with a 95%+ historical success rate over 30 years.
What is a safe withdrawal rate for early retirement (40+ years)?
For retirements lasting 40+ years, research suggests 3.25–3.5% is safer than the traditional 4%. A $2M portfolio at 3.5% provides $70,000/year. With dynamic spending (cutting 10–15% in down markets), you can safely withdraw 4–4.5% even over 50 years.
Plan your financial future
Pick your decision. Tap through a few screens. Get a confident answer in under 60 seconds.
Model My Decision