Safe Withdrawal Rate Calculator (4% Rule)
Calculate how much you can safely withdraw from your portfolio each year based on the 4% rule of retirement.
Understanding the Safe Withdrawal Rate
The Safe Withdrawal Rate (SWR) is the percentage of your portfolio that you can withdraw annually in retirement without running out of money before you die. The most famous benchmark is the "4% Rule" established by the Trinity Study.
The 4% Rule Explained
The 4% rule suggests that if you withdraw 4% of your initial portfolio value in your first year of retirement, and then adjust that dollar amount for inflation every subsequent year, a portfolio consisting of 50% stocks and 50% bonds should last for at least 30 years in almost all historical market conditions.
Worked Example
- Portfolio Value: $1,000,000
- Withdrawal Rate: 4%
- Year 1 Withdrawal: $40,000 (or $3,333/month).
- If inflation in Year 2 is 3%, your Year 2 withdrawal becomes $41,200.
Frequently Asked Questions
Is 4% still safe today?
Many modern financial advisors argue that due to lower bond yields and longer life expectancies, a more conservative withdrawal rate of 3.3% to 3.5% is safer for early retirees planning for a 40+ year retirement.
Disclaimer: This calculator is for educational and informational purposes only. It is not a substitute for professional financial advice. Results are estimates based on the information provided and may not reflect actual outcomes. Please consult with a qualified financial advisor, accountant, or tax professional before making any financial decisions. Past performance does not guarantee future results.