About the 4% Rule

The 4% rule is a guideline for retirement withdrawals developed from the Trinity Study. It suggests that retirees can withdraw 4% of their initial retirement savings in the first year, and then adjust that amount for inflation each year thereafter, with a high probability of not running out of money for at least 30 years.

How the calculation works

This calculator uses the formula:

Required Savings = (Annual Expenses – Annual Additional Income) ÷ Withdrawal Rate

For example, if you need $40,000 per year ($3,333 monthly) and have no additional income, with a 4% withdrawal rate you would need: $40,000 ÷ 0.04 = $1,000,000

Important Considerations

• The 4% rule is a guideline, not a guarantee
• Your actual safe withdrawal rate may vary based on market conditions, investment allocation, and retirement duration
• This simplified calculator doesn’t account for taxes or unexpected expenses
• Consider consulting with a financial advisor for personalized retirement planning