4% Rule Calculator — Safe Withdrawal Rate for Retirement

4% rule calculator: is your withdrawal rate safe?

The 4% rule says that if you take 4% of your retirement portfolio in the first year and then raise that amount with inflation every year, the money has historically lasted at least 30 years. This 4% rule calculator lets you test that idea with your own numbers: how many years a portfolio lasts at any starting withdrawal rate, the highest safe withdrawal rate for the length of retirement you choose, what is left at the end, and how a market crash in the first year changes the picture.

It works in dollars, pounds, euros, rupees and other currencies, and it doubles as a simple retirement drawdown calculator — choose to withdraw the same percentage of each year’s balance instead, and see how the income moves with markets.

How to use the Safe Withdrawal Rate (4% Rule) Calculator

1. Enter your Portfolio at retirement and the first-year withdrawal, as a rate (4%) or an amount.
2. Choose Later years: the amount raised for inflation (the 4% rule) or the same percentage of each year’s balance.
3. Set the expected return, inflation, fees and the retirement length.
4. Optionally enter a market fall in year 1 to test sequence-of-returns risk.
5. Read how long the money lasts, the highest safe starting rate and the year-by-year schedule; download it as CSV.

Safe Withdrawal Rate (4% Rule) Calculator features

Where the 4% rule comes from

Financial planner William Bengen tested withdrawal rates against US market history in “Determining Withdrawal Rates Using Historical Data” (Journal of Financial Planning, October 1994). With a portfolio of half large-company US shares and half intermediate-term Treasury bonds, an initial withdrawal of 4% raised each year for inflation lasted at least 33 years in every historical period from 1926 that he examined. He called the highest rate that survived the worst period the “SAFEMAX”.

In 1998 three professors at Trinity University — Philip Cooley, Carl Hubbard and Daniel Walz — published “Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable” in the AAII Journal. Instead of the worst case they counted how often each rate succeeded over 15 to 30 years, using US data from 1926 to 1995. A 4% inflation-adjusted withdrawal from portfolios with at least half in shares succeeded in the great majority of 30-year periods; rates of 6% and more failed often. That paper is the “Trinity study”.

The maths behind the calculator

Each year the withdrawal is taken first and the rest earns the return less fees: balance = (balance − withdrawal) × (1 + return − fees). Under the 4% rule the withdrawal in year k is W₁ × (1 + inflation)k−1. With a constant return r and inflation g, the highest first withdrawal that lasts N years is W₁ = P ÷ Σ ((1 + g) ÷ (1 + r))k for k = 0 … N − 1.

Worked example: $1,000,000 at 4% is $40,000 in year 1. With 6% returns and 3% inflation the portfolio earns $57,600 on the $960,000 left, ending the year at $1,017,600; year 2’s withdrawal is $41,200. The money outlasts 30 years, and at these assumptions it lasts about 42 years 9 months, and the highest rate that lasts exactly 30 years is 4.90% — or 4.34% after a 1% yearly fee. If returns only match inflation, 4% lasts exactly 25 years — the 25× rule in reverse.

Limits of the 4% rule

• It is built on US history. Studies of other countries’ markets, such as Wade Pfau’s international comparison (2010), found lower safe rates in many of them.
• It assumes 30 years. Early retirees planning for 40 or 50 years often use 3–3.5% instead.
• Fees and taxes come out of the same money: a 1% yearly fee cuts the safe rate noticeably — try it above.
• Constant returns hide sequence risk. A crash early in retirement does far more damage than the same crash later.
• For mutual-fund withdrawals with Indian tax, use the SWP calculator; to build the pot first, the retirement calculator; for guaranteed income, the annuity calculator.