Safe Withdrawal Rate
How much can you withdraw each year without running out? The answer depends on your time horizon, portfolio mix, and how much risk you can sleep through.
Test your withdrawal rate
Withdrawal Rate
The 4% rule
In 1994, financial planner William Bengen analyzed historical US market returns and concluded that a 4% initial withdrawal rate — adjusted each year for inflation — never exhausted a 50/50 stock/bond portfolio over any 30-year period in history. The Trinity Study (1998) confirmed similar success rates across portfolio allocations.
The shorthand: 25 × your annual expenses = your FIRE number.
4% of $1,250,000 = $50,000/year
Why 4% isn't guaranteed
The 4% rule is based on historical data. It assumes a 50/50 stock/bond mix, constant annual inflation adjustments, and a 30-year horizon. Sequence of returns risk — a market crash early in retirement before recovery — is the biggest threat. A 50% drop in year one with $40,000 withdrawals is far more damaging than the same drop in year twenty.
Dynamic alternatives
- Variable withdrawal — Withdraw a fixed percentage of your portfolio each year (e.g., 4%). Falls in downturns, rises in bull markets.
- Guardrail method — Start at 4%. Reduce spending 10% if portfolio drops 20%. Increase if it doubles.
- Ratchet method — Raise spending when portfolio hits new highs. Never cut.
Withdrawal rates by horizon
| Years in Retirement | Safe Rate | FIRE Multiple |
|---|---|---|
| 20 years | 5.0% | 20× |
| 25 years | 4.5% | 22× |
| 30 years | 4.0% | 25× |
| 35 years | 3.7% | 27× |
| 40 years | 3.5% | 29× |
| 50 years | 3.2% | 31× |
The practical takeaway
The real question is not "what's the safest rate" but "what withdrawal rate gives me confidence I never have to go back to work?" For a 30-year retirement, 3.5–4% is the reasonable range. For early retirees planning 40–50 years, 3–3.5% is more conservative.
This calculator uses simplified projections. Does not account for taxes, sequence of returns, or changes in personal circumstances. Not financial advice.