← Guides · November 10, 2026
The 4% Rule and Safe Withdrawal Rates, Explained
The 4% rule is the shortcut behind many early-retirement plans: withdraw 4 percent of your portfolio in the first year, adjust that amount for inflation each year, and the money should last about 30 years. It is also widely misunderstood.
Where it comes from
The rule traces back to research that looked at historical US stock and bond returns and asked how much a retiree could withdraw without running out over a 30-year period. The result depended on the specific historical periods studied. It does not mean 4 percent is guaranteed to work in the future.
What it assumes
- A retirement of roughly 30 years. Early retirees may need their money to last 40 or 50 years, which many planners treat as a reason to consider a lower rate.
- A mix of stocks and bonds, and that you keep withdrawing even when markets fall.
- Inflation-adjusted withdrawals, regardless of how the portfolio performs.
Sequence of returns risk
Poor market returns early in retirement hurt more than the same returns later, because you are selling assets while prices are low. Two retirees with the same average return can have very different outcomes depending on the order of the years.
Using it to find your number
If you spend a given amount per year, dividing it by your chosen withdrawal rate gives a target portfolio. At 4 percent that is 25 times annual spending; at 3.5 percent, about 29 times. Try several rates to see the range.
Flexibility helps
Plans that allow small spending cuts after bad years, or some part-time income, are generally more resilient than rigid ones. Taxes, healthcare and Social Security timing also matter.
The calculator on the home page lets you test different rates and spending levels. It is a planning aid, not investment advice.