4% Rule Calculator
Test if your retirement portfolio can sustain your lifestyle. Find the withdrawal rate that balances income and longevity.
Understanding the 4% Rule
The 4% rule emerged from the Trinity Study (1998), which analyzed historical US stock and bond returns to find a "safe" withdrawal rate for retirees. The key finding: a 4% initial withdrawal rate, adjusted for inflation annually, had a high probability of lasting 30 years.
THE 4% RULE IN PRACTICE
Year 1: Withdraw 4% of portfolio
Year 2+: Previous withdrawal × (1 + inflation)
Example: $1M portfolio → $40k year 1 → $41.2k year 2 (3% inflation)
Historical Safety
Based on worst-case historical scenarios including the Great Depression and stagflation.
Inflation Adjusted
Your spending power stays constant as withdrawals increase with inflation each year.
Sequence Risk
Early bear markets hurt most. Bad first years can deplete portfolios faster than expected.
Withdrawal by Portfolio Size
See how different withdrawal rates affect your annual income:
| Portfolio | 4% Rule | 3.5% | 3% |
|---|---|---|---|
| $500,000 | $20,000/yr | $17,500/yr | $15,000/yr |
| $1,000,000 | $40,000/yr | $35,000/yr | $30,000/yr |
| $1,500,000 | $60,000/yr | $52,500/yr | $45,000/yr |
| $2,000,000 | $80,000/yr | $70,000/yr | $60,000/yr |
Lower withdrawal rates = less income but higher probability of portfolio survival
Safe Withdrawal Rate by Retirement Horizon
The 4% rule was designed for 30-year retirements. Early retirees need lower rates to account for longer time horizons and increased sequence-of-returns risk.
| Retirement Length | Typical Age | Safe Rate | Multiplier | Success |
|---|---|---|---|---|
| 30 years | Retire at 65 | 4.0% | 25x | 95%+ |
| 40 years | Retire at 55 | 3.5% | 28.5x | 95%+ |
| 50 years | Retire at 45 | 3.25% | 31x | 95%+ |
| 60 years | Retire at 35 | 3.0% | 33x | 95%+ |
FIRE Retiree Example: Retiring at 40 with a 55-year horizon? Use 3.0-3.25%. For $50,000/year spending, you need $1.54M-$1.67M (not the $1.25M that 4% suggests).
2026 Withdrawal Rate Outlook
Current market conditions affect safe withdrawal rates. Here's what matters for new retirees in 2026:
CAPE Ratio: ~32
Stocks are historically expensive. When CAPE is above 25, 10-year returns average 4-6% (vs 10% historical).
Impact: Consider 3.3-3.5% instead of 4%
Bond Yields: ~4.5%
Higher than the 2010s (1-2%), providing meaningful income. This supports the 4% rule better than recent years.
Impact: Bonds now contribute real returns
2026 Recommendation
For new retirees in 2026 with a 30-year horizon, research suggests 3.3-3.7% is prudent given high equity valuations, despite improved bond yields. This means $33,000-$37,000 from a $1M portfolio.
Bill Bengen (creator of the 4% rule) now suggests 4.7% may work with small-cap value allocation and spending flexibility.
Dynamic Withdrawal Strategies
The fixed 4% rule isn't your only option. Dynamic strategies adjust withdrawals based on market performance, often allowing higher initial spending with similar safety.
| Strategy | Initial Rate | From $1M | Flexibility | Best For |
|---|---|---|---|---|
| Fixed 4% Rule | 4.0% | $40,000 | None | Traditional 30-year retirement |
| Guyton-Klinger | 5.0-5.5% | $50-55,000 | ±10% adjustments | Retirees with spending flexibility |
| VPW (Variable %) | Age-based | $35-50,000 | High variance | Those prioritizing portfolio survival |
| CAPE-Adjusted | 3.3-5.0% | $33-50,000 | Market-based | Evidence-based investors |
Guyton-Klinger Guardrails
Start at 5% ($50k from $1M). If portfolio drops and your rate hits 6% (20% above target), cut spending 10%. If rate drops to 4%, increase spending 10%.
Research shows 95%+ success with these guardrails vs. fixed 4%.
CAPE-Based Withdrawal
Adjust rate based on market valuation. CAPE > 25? Use 3.3%. CAPE 15-25? Use 4%. CAPE < 15? Use 5%. This systematically spends more when stocks are cheap.
Currently (CAPE ~32), this suggests 3.3% for new retirees.
When to Adjust Your Rate
Use 3-3.5% if...
- •Retiring before 50 (40+ year retirement)
- •No flexibility to reduce spending
- •Want maximum safety margin
- •Concerned about current valuations
4% is likely fine if...
- •Standard 30-year retirement
- •Some spending flexibility
- •Additional income sources (Social Security, part-time work)
- •Willing to adjust in down markets
Consider 4.5%+ only if...
- •Guaranteed income covers essentials
- •High spending flexibility
- •Shorter retirement horizon
- •Willing to return to work if needed
Frequently Asked Questions
What is the 4% rule?
The 4% rule states that you can withdraw 4% of your retirement portfolio in year one ($40,000 from $1M), then adjust that amount for inflation each year. Based on the 1998 Trinity Study analyzing 1926-1995 returns, it had a 95% success rate over 30 years with a 50/50 stock/bond portfolio.
Is the 4% rule still valid in 2026?
The 4% rule faces headwinds in 2026. With the CAPE ratio above 30 (historically high valuations), many experts recommend 3.3-3.5% for new retirees. Bill Bengen, who originated the rule, now suggests 4.7% may work with small-cap value stocks and spending flexibility.
What withdrawal rate should I use for early retirement?
For 30-year retirements, 4% is historically safe (95%+ success). For 40-year horizons (retiring at 50), use 3.5%. For 50+ year horizons (retiring at 35-40), research suggests 3.25% to maintain 95% success rates. Add 0.5% if you have spending flexibility.
How much do I need to retire with the 4% rule?
Multiply your annual expenses by 25. Need $40,000/year? You need $1M. Need $60,000/year? You need $1.5M. Need $80,000/year? You need $2M. This is called the "25x rule" - the inverse of 4%.
Does the 4% rule include taxes?
No - the 4% rule calculates gross withdrawals, not after-tax spending. If you withdraw $40,000 from a traditional 401(k) in the 22% bracket, you only have $31,200 to spend. Plan for roughly 15-25% less spending power from pre-tax accounts.
What is sequence of returns risk?
Sequence risk means poor returns early in retirement are devastating. A 30% crash in year 1 with 4% withdrawals can cut your portfolio in half permanently. This is why many recommend a "bond tent" - higher bond allocation (60-70%) at retirement, gradually shifting to stocks.
What are Guyton-Klinger guardrails?
A dynamic withdrawal strategy allowing higher initial rates (5-5.5%) with guardrails: if your withdrawal rate rises 20% above target (market crash), cut spending 10%. If it falls 20% below (market boom), increase spending 10%. This can support $50-55k withdrawals from $1M vs $40k with fixed 4%.
How does asset allocation affect the 4% rule?
The Trinity Study tested 50/50 to 75/25 stock/bond portfolios. 75% stocks had slightly higher success rates (98% vs 95% at 4%). 100% stocks is riskier due to volatility. Most experts recommend 60-80% stocks for early retirees to outpace inflation.
Should I use 3% or 4% for FIRE?
For traditional FIRE (retiring at 40-45), 3.5% is the sweet spot - $35k from $1M. For Lean FIRE or retiring before 40, use 3.25%. If you have guaranteed income (pension, rental) covering 50%+ of expenses, 4% on the remaining portfolio is reasonable.
What about Social Security and the 4% rule?
Social Security reduces reliance on your portfolio. If you need $60k/year and expect $24k in Social Security at 67, you only need to withdraw $36k from investments. Many early retirees use higher rates (4-5%) before Social Security kicks in, then reduce to 2-3%.
Related Calculators
Methodology & Sources
Our 4% rule calculator is based on the Trinity Study (1998) and subsequent research from Bill Bengen, Early Retirement Now, and Vanguard. Safe withdrawal rates are calculated using historical U.S. market data from 1926-present.
- • Trinity Study (Cooley, Hubbard, Walz, 1998)
- • Bengen, W. "Determining Withdrawal Rates" (1994, updated 2024)
- • Early Retirement Now SWR Series (50-part analysis)
- • Vanguard Research: "Fuel for the FIRE" (2023)
Calculator Transparency
- ✓No email required to use calculator
- ✓All calculations performed client-side (your data stays private)
- ✓No affiliate links or financial product recommendations
- ✓Open methodology based on peer-reviewed research
Last updated: January 2026 • Data reflects 2026 market conditions including CAPE ratio and bond yields
Sources
- [1]Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable(1998)
- [2]Determining Withdrawal Rates Using Historical Data(1994)
- [3]Safe Withdrawal Rate Series
- [4]Historical Returns on Stocks, Bonds and Bills
- [5]Guyton-Klinger Guardrails Method(2006)
Not financial advice. This calculator is for educational purposes only and does not constitute financial, tax, or investment advice. Results are estimates based on the inputs you provide and historical data. Consult a qualified financial advisor for personalized guidance. Read our editorial guidelines.