Safe Withdrawal Rate Calculator

The 4% rule, established by financial planner William Bengen in 1994 and confirmed by the Trinity Study (1998), states that you can withdraw 4% of your initial portfolio balance in the first year of retirement, then adjust that dollar amount for inflation each year, and your portfolio will last at least 30 years in almost all historical scenarios.

Bengen analyzed all historical 30-year rolling periods starting from 1926, testing withdrawal rates from 1% to 9%, and found that 4% was the highest rate that survived all 30-year periods without depleting the portfolio (for a 50/50 stocks/bonds mix). The Trinity Study extended this analysis through 1995.

Some researchers, including Pfau and Kitces, have argued that lower expected returns in recent decades suggest a more conservative rate of 3-3.5% for new retirees. Others argue the 4% rule remains valid for flexible spenders. Morningstar's 2023 research suggested 3.8% for a 30-year retirement at a 90% confidence level.

Divide your desired annual spending by your chosen safe withdrawal rate. For $40,000 per year at 4%: $40,000 / 0.04 = $1,000,000 needed. This is also called the '25x rule' (25 times your annual spending). At a 3.5% rate, you need approximately 28.6 times your annual spending.

No. The safe withdrawal rate assumes all retirement income comes from the investment portfolio. If you receive Social Security, a pension, or other guaranteed income, you only need to withdraw the difference between your spending and your guaranteed income. This reduces the portfolio size needed.