The 4% rule is the best-known shortcut for answering the scariest question in retirement planning: "How much can I spend each year without running out of money?" It comes from the Trinity Study — a 1998 analysis by three finance professors at Trinity University — which back-tested how long a 50/50 stock-and-bond portfolio would survive different withdrawal rates across every 30-year retirement period from 1926 onward. Their headline finding: withdrawing 4% of your starting balance in year one, then raising that dollar amount each year for inflation, worked in roughly 95% of historical 30-year windows.
This calculator lets you plug in your own nest egg, expected return, inflation, and planned retirement length, then shows your safe year-one withdrawal, the monthly check it works out to, how many years the portfolio actually lasts, and what you will have left at the end of your planning horizon.
How to Use
- Enter your Retirement Nest Egg — the total amount you expect to have invested on the day you stop working. Include 401(k), IRA, taxable brokerage, and any other liquid portfolio you plan to draw from.
- Set the Safe Withdrawal Rate. The Trinity Study benchmark is 4.0%, but you can test 3.0% (more conservative), 5.0% (more aggressive), or anything in between.
- Type your Expected Annual Return. A diversified 60/40 portfolio has averaged roughly 6–7% nominal over the long run; if you plan to hold more bonds or retire into a bear market, knock it down a couple of points.
- Enter your Inflation Rate. The withdrawal itself grows by this number every year, so purchasing power stays steady. Use 2.5% as a long-run baseline, or 3–4% if you expect today's higher-price regime to persist.
- Choose your Planning Horizon. 30 years matches the classic Trinity window (age 65 to 95). If you are retiring early — say at 50 — bump this to 40 or 45.
The result card breaks out your year-one safe withdrawal, the equivalent monthly amount, the number of years your portfolio actually survives under those assumptions, your projected balance at the end of the horizon, and the total dollars you will have withdrawn. If "How Long Your Money Lasts" comes back below your planning horizon, your withdrawal rate is too high for those return assumptions.
How the Math Works
The calculation is a year-by-year simulation, not a single formula. It follows the same cash-flow order the Trinity Study used:
- Year-one withdrawal = nest egg × withdrawal rate. On a $1,000,000 portfolio at 4%, that is $40,000.
- Each year, you withdraw that year's amount at the start, then the remaining balance grows for the year by your expected return.
- The next year's withdrawal gets a raise equal to inflation, so a $40,000 withdrawal in year one becomes about $41,000 in year two at 2.5% inflation, $42,025 in year three, and so on.
Run the standard case — $1,000,000, 4% withdrawal, 6% return, 2.5% inflation, 30 years — and the year-one check is $40,000 (about $3,333 per month). Because the portfolio returns 6% while withdrawals only rise 2.5%, the balance keeps growing through the decade and ends the 30-year horizon near $1.33 million, even after paying out roughly $1.76 million of withdrawals along the way. That surplus is what gives the 4% rule its famous margin of safety.
If returns drop to 0% (a worst-case flat market), the math changes sharply: that same $1,000,000 at 4% with 2.5% inflation is depleted in roughly 19.7 years — which is exactly why the rule is framed as a starting point, not a guarantee.
Examples
Example 1 — The classic retiree. A 65-year-old couple has saved $1,200,000 in a 60/40 portfolio and wants a 30-year plan. At the standard 4% withdrawal rate, they can spend $48,000 in year one (about $4,000 per month), adjust that check each year for inflation, and — assuming a 6% nominal return — still have a sizable balance left after three decades.
Example 2 — The FIRE early retiree. A 45-year-old aiming for financial independence has $900,000 and a 45-year horizon. Dropping the withdrawal rate to 3.5% lowers year-one spending to $31,500 (about $2,625/month), but extends the survival margin dramatically because the smaller annual check gives the portfolio far more time to compound.
Example 3 — The high-net-worth stress test. On a $5,000,000 nest egg at 4% with 6% returns and 2.5% inflation, the year-one withdrawal is $200,000 (about $16,667/month), and the projected balance after 30 years is roughly $6.6 million. Even at this scale the math stays stable — the engine scales linearly, so doubling the nest egg doubles every dollar output without changing the years-survived figure.
FAQ
What is the 4% rule?
The 4% rule is a guideline from the 1998 Trinity Study (and earlier work by William Bengen in 1994). It says that if you withdraw 4% of your retirement portfolio balance in your first year of retirement, then increase that dollar amount each subsequent year for inflation, your money has historically survived at least 30 years about 95% of the time using US stock and bond returns from 1926 onward.
Is the 4% rule still safe in 2026?
Debate has intensified since the 2022–2023 bear market and the higher-return environment on cash. Many advisors now suggest 3.5% as a more conservative starting point for early retirees or people retiring into expensive valuations, while a 4–5% rate remains reasonable for a traditional 65-year retirement with a balanced portfolio. Use the slider in this calculator to test your own number.
How much do I need to retire at 4%?
Flip the rule around: divide your desired annual retirement spending by 0.04. If you want to spend $60,000 per year in today's dollars, your target nest egg is $60,000 ÷ 0.04 = $1,500,000. Want $100,000 per year? You need $2.5 million. This is why the rule is also called the "25× your annual spending" rule.
Does the 4% rule adjust for inflation?
Yes. The rule is explicitly inflation-adjusted: the 4% is only applied to your starting balance once, and every year afterward your withdrawal rises by the inflation rate. That means your purchasing power stays roughly constant even though the nominal dollar check gets larger each year. If you turn the inflation slider to 0%, every withdrawal stays flat in nominal dollars and your lifestyle quietly shrinks.
What happens if my portfolio drops right after I retire?
That sequence-of-returns risk is the biggest danger to the 4% rule. A deep bear market in your first three to five years forces you to sell depressed shares to fund withdrawals, which is mathematically much harder to recover from than a bear market in year 20. Mitigations include holding two to three years of cash in bonds, cutting discretionary spending in down years, or dropping your starting withdrawal to 3–3.5%.
Can I withdraw more than 4% if I have a pension?
Absolutely. A pension, Social Security, or rental income that covers your fixed baseline expenses reduces the load on your portfolio. Many retirees can safely take 5% or more from a discretionary "fun money" bucket because their core spending is already covered by guaranteed income. Plug your actual portfolio withdrawal need — not your total spending — into this calculator.
How long will my money last at a 4% withdrawal rate?
Under the classic 4% / 6% return / 2.5% inflation / 30-year assumptions, a balanced portfolio typically lasts well beyond 30 years and may leave a significant inheritance. Drop the expected return to 0% and the same $1,000,000 is exhausted in roughly 20 years; push returns to 8% and the balance grows almost indefinitely. Use the calculator to model your own scenario.
Disclaimer
This 4% rule calculator is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice. Projections assume constant average returns and fixed inflation, which real markets never deliver; actual sequence-of-returns risk, taxes, fees, and healthcare costs can meaningfully change outcomes. The Trinity Study's 95% success rate is a historical average, not a guarantee. Always work with a fiduciary financial advisor before drawing down a retirement portfolio.