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4% Rule Calculator

Enter your portfolio value and withdrawal rate to find sustainable retirement spending.

How it is calculated

The tool multiplies the portfolio by the withdrawal rate: annual = portfolio × rate ÷ 100, then monthly = annual ÷ 12. The rate is entered as a percentage, so 4 means 4%, not 0.04. You can enter the classic 4% or a lower, more cautious figure. Amounts are shown in US dollars. The result is the first-year withdrawal only. The tool does not project later years, so it applies no inflation adjustment, no investment returns, no taxes and no fees. Negative values give no result. To work backwards, divide the spending you want by the rate (at 4% that is 25 times annual spending) to see the portfolio size it implies.

Worked example

Portfolio of 750,000 and a cautious withdrawal rate of 3.5%. Annual spending = 750,000 × 3.5 ÷ 100 = $26,250.00. Monthly spending = 26,250 ÷ 12 = $2,187.50. The rate is echoed back as 3.50%. At the standard 4% the same portfolio would give $30,000 a year, so lowering the rate by half a percentage point reduces first-year income by $3,750.

Try this example →

Common mistakes

  • Entering 0.04 for 4%. The field takes percent, so 0.04 would mean 0.04% and produce a tiny amount.
  • Treating the annual figure as fixed forever. The rule raises the dollar amount with inflation each year; the calculator shows only year one.
  • Using gross, pre-tax portfolio amounts and spending the result as if it were net. Withdrawals from tax-deferred accounts are usually taxed.
  • Applying the rate to the wrong balance, such as only the stock portion or including your home equity. Use the investable portfolio.
  • Assuming 4% is guaranteed safe for any retirement length. A longer retirement or poor early returns may call for a lower rate.

Sources

About this calculator

The 4% Rule is a retirement withdrawal guideline stating that a retiree can withdraw 4% of their investment portfolio’s value in the first year of retirement, then adjust that dollar amount for inflation each subsequent year, with a reasonably high probability the money will last at least 30 years. It comes from the “Trinity Study,” which back-tested historical stock and bond returns to find a sustainable withdrawal rate.

Working backward, the rule also gives a simple retirement savings target: multiply desired annual spending by 25 (the inverse of 4%) to estimate the portfolio size needed to retire. It’s widely used as a starting point in the FIRE (Financial Independence, Retire Early) community and by financial planners, though critics note it was tested on a specific historical period and market conditions, sequence-of-returns risk, and fees can all affect whether 4% still holds up for any individual retiree.

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Comments (1)

  • Editorial team

    The 4 percent figure comes from historical US stock and bond data over roughly thirty-year retirements. Someone retiring far earlier faces a longer horizon, and lower rates are often tried there, so run the same portfolio at 3 and 3,5 percent to see how the income changes. The result is before tax. What withdrawal rate are you testing?

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