4% Rule Withdrawal Calculator
This 4% rule withdrawal calculator simulates whether your portfolio will sustain your planned spending over retirement. The 4% rule, developed by financial planner William Bengen in 1994, suggests withdrawing 4% of your starting portfolio in year one, then increasing that dollar amount by inflation each subsequent year. Historical backtesting across US market data from 1926 onwards showed this approach sustained 30-year retirements in the vast majority of market conditions. Enter your starting portfolio size, annual withdrawal amount, expected annual return and time horizon (in years), then specify an annual inflation adjustment to withdrawals. The calculator projects your portfolio balance year by year, showing whether it lasts the full horizon and when it would be depleted if applicable. Results include withdrawal rate, year-one withdrawal, a verdict on sustainability, balance at end of horizon and total withdrawn. An important caveat: this simulation assumes constant returns, not real market volatility. Sequence of returns risk means poor early returns can deplete a portfolio much faster, so the 4% rule assumes a diversified portfolio and willingness to adjust spending in down markets.
A $1,000,000 portfolio withdrawing $40,000/year (4.0% withdrawal rate) at 6% annual return over 30 years with 2% annual inflation adjustment: --.
This simulation assumes a constant annual return. Real markets are volatile. Sequence of returns risk means poor early returns can deplete a portfolio much faster than this model suggests. General information only, not financial advice.
Year-by-year withdrawal simulation
Each row shows the start balance, that year's inflation-adjusted withdrawal, portfolio growth, and end balance.
| Year | Start balance | Withdrawal | Growth | End balance |
|---|---|---|---|---|
| Enter values above to run the simulation. | ||||
How this simulation works
The simulation models a portfolio that earns a constant annual return and makes one inflation-adjusted withdrawal per year. Each year the portfolio grows by the return rate, then the annual withdrawal is subtracted. The withdrawal amount increases by the inflation rate each year to reflect cost-of-living adjustments.
For each year y from 1 to horizon:
withdrawal(y) = withdrawal(1) x (1 + inflation/100)^(y-1)
growth = balance x (returnRate/100)
end balance = balance + growth - withdrawal(y)
end balance cannot go below zero
Worked example (default values)
$1,000,000 portfolio, $40,000 year-1 withdrawal (4% rate), 6% return, 30 years, 2% inflation:
- Year 1: start $1,000,000, growth $60,000, withdrawal $40,000, end $1,020,000
- Year 2: start $1,020,000, growth $61,200, withdrawal $40,800 (2% higher), end $1,040,400
- At 6% return and 4% starting withdrawal rate the portfolio grows over 30 years.
The context for these figures: at $40,000/year from a $1,000,000 portfolio, the withdrawal rate is exactly 4%, the traditional benchmark of the 4% rule. Change the inputs to test your own situation.
Sequence of returns risk and why this model has limits
This calculator assumes the portfolio earns the same percentage return every year. In reality, stock markets fluctuate significantly from year to year. Sequence of returns risk describes the outsized impact of poor returns in the early years of retirement. If the portfolio drops 30% in year two (as happened in the 2000-2002 and 2008 downturns), the absolute dollar loss is far larger than the same percentage drop in year twenty, because the portfolio is biggest at the start.
Monte Carlo simulations, which model thousands of random return sequences, give a more accurate picture of portfolio survival probability. This calculator provides a deterministic baseline; treat it as one input into a broader retirement plan, not a definitive forecast.
The role of Social Security
Social Security income reduces how much you need to withdraw from your portfolio each year. If you receive $20,000 per year in Social Security benefits and need $50,000 per year total, you only need $30,000 from your portfolio, implying a much lower withdrawal rate and a far higher probability of the portfolio lasting. The SSA life expectancy tables at ssa.gov/oact/STATS/table4c6.html can help you estimate how long your portfolio needs to last given your current age.
Withdrawal calculator: frequently asked questions
What is the 4% rule for retirement withdrawals?
The 4% rule holds that a retiree can withdraw 4% of their starting portfolio in the first year of retirement, then increase that dollar amount by inflation each subsequent year, and the portfolio has historically lasted at least 30 years across US market data from 1926 to the mid-1990s. William Bengen's 1994 analysis established this benchmark. At a $1,000,000 starting portfolio, 4% equals $40,000 per year. The CFPB retirement tools at consumerfinance.gov cover withdrawal planning concepts.
What withdrawal rate is safe for a 40- or 50-year retirement?
For retirements lasting 40-50 years, many financial planners recommend reducing the withdrawal rate to 3% or 3.5% to account for the longer time horizon and greater exposure to unfavourable return sequences. A 3.5% rate on a $1,000,000 portfolio gives $35,000 per year in year one. Flexible spending strategies, where withdrawals are reduced in poor market years, can help sustain a higher initial rate.
Does the 4% rule account for inflation?
The original Bengen analysis assumed inflation-adjusted withdrawals, meaning the dollar amount withdrawn increases by the inflation rate each year to maintain constant purchasing power. This calculator lets you set an annual inflation adjustment on withdrawals (default 2%) to model this effect. Without inflation adjustment, the real value of your withdrawals falls each year.
What is sequence of returns risk?
Sequence of returns risk is the danger that poor investment returns early in retirement, when the portfolio is largest and withdrawals are being taken, can permanently impair the portfolio even if long-run average returns are acceptable. For example, a 20% portfolio loss in year two of retirement depletes far more capital than the same loss in year twenty. This constant-return simulation does not capture sequence of returns risk; real outcomes will vary. Strategies to mitigate this risk include holding a cash buffer, flexible spending, and a bond tent at the start of retirement.
How much do I need to retire?
Using the 4% rule as a rough guide, multiply your desired annual income in retirement by 25 to get the required portfolio size. For $60,000 per year, the implied portfolio is $1,500,000. This figure should then be adjusted for Social Security income you will receive (which reduces the amount you need to withdraw from the portfolio), healthcare costs, taxes, and any other income sources. The SSA's online retirement estimator at ssa.gov can estimate your Social Security benefit.
Can I use this calculator if my portfolio is not all invested in stocks?
Yes. The expected annual return field should reflect your actual asset allocation, not just stocks. A 60/40 stock-bond portfolio has historically returned less than an all-equity portfolio. A commonly used planning assumption for a balanced 60/40 portfolio is around 5-6% annually before fees. Adjust the return field to match your expected blended return. The CFPB offers guidance on asset allocation concepts at consumerfinance.gov.
Official sources
- Retirement withdrawal planning: CFPB, Retirement Tools
- Life expectancy data: SSA, Actuarial Life Table (Period Life Table)
- Social Security benefit estimator: SSA, Retirement Planner
Reviewed by the CalculatorHub team, edited by James Graham, 12 June 2026. See our methodology. General information, not financial advice.