Retirement Withdrawal (4% Rule) Calculator

The "4% rule" is a starting point, not a promise: withdraw 4% of your portfolio in year one, give yourself a raise each year to keep pace with inflation, and — according to decades of historical U.S. market data — your money has a good chance of lasting 30 years. This calculator runs that math two ways. Give it a portfolio and it tells you what a safe first-year withdrawal looks like; give it a spending target and it works backward to the portfolio size you'd need. Either way, it then simulates your balance year by year so you can see whether it actually survives your chosen horizon, rather than just trusting a percentage.

Where the 4% Actually Comes From — and Its Real Limits

The number isn't arbitrary. It comes from William Bengen's 1994 study and the later Trinity Study, which both tested a range of withdrawal rates against real historical U.S. stock and bond returns to find the rate that survived the worst 30-year stretches on record — including retirements that started right before major downturns. Roughly 4% held up in nearly every historical case they examined.

That history comes with honest caveats this calculator won't hide from you. First, it doesn't model sequence-of-returns risk: a market crash in your first two or three retirement years does far more damage than the identical crash showing up in year twenty-five, because you're forced to sell depreciated shares to fund withdrawals right when the account is smallest. This tool's year-by-year simulation uses one constant "Expected Annual Return" for every year, so it cannot show you that risk — it shows you the average-case path, not the worst-case path. Second, the original research — and this calculator — assumes a fairly static asset allocation held for decades; it doesn't account for you rebalancing, de-risking as you age, or picking up other income like Social Security partway through. Treat every result here as a planning estimate under one set of assumptions, never a guarantee.

Worked Example: $1,200,000 Portfolio, 4% Rule, 6% Return, 3% Inflation, 30-Year Horizon

Start with the calculator's own defaults. A $1,200,000 portfolio at a 4% withdrawal rate gives an initial annual withdrawal of $1,200,000 × 0.04 = $48,000. From there, the simulation runs forward one year at a time: each year's withdrawal grows by the 3% inflation rate over the prior year's withdrawal, and each year's ending balance is (previous balance − that year's withdrawal) × 1.06.

Working through the first few years by hand: Year 1 withdraws $48,000 from $1,200,000, leaving $1,152,000, which grows at 6% to $1,221,120. Year 2's withdrawal rises with inflation to $48,000 × 1.03 = $49,440; after withdrawing that from $1,221,120 and applying 6% growth, the balance reaches roughly $1,241,981. Because the 6% return outpaces the inflation-adjusted withdrawal for a long stretch, the balance actually keeps climbing for about two decades before inflation-driven withdrawals catch up and it starts declining. Running the full simulation out to year 30 leaves a balance of roughly $1,267,866 — meaning under these specific assumptions, the portfolio doesn't just survive the 30-year horizon, it ends larger than it started. Push the same assumptions further and the balance would eventually turn the corner and reach zero around year 43, which is the honest way to describe this scenario: comfortably safe for a 30-year retirement, with real (if not unlimited) margin beyond it.

Building Toward Retirement vs. Drawing It Down

This calculator answers the drawdown side of retirement planning: given a pile of money, how much can you safely take out? The accumulation side — how you get to that pile in the first place — is handled by different tools. If you're still saving toward a target number, the Savings Goal Calculator shows how a monthly contribution plan grows over time. If your retirement savings sit specifically in an IRA or 401(k), the IRA Calculator and 401(k) Calculator model those accounts' contribution limits and growth directly. And if you just want to see how any lump sum compounds under a fixed rate — no contributions, no withdrawals — the Compound Interest Calculator isolates that single mechanic.

Reading the "How Much Do I Need to Retire?" Mode

Switch modes and the math simply runs in reverse: Required Portfolio = Desired Annual Spending ÷ (Safe Withdrawal Rate ÷ 100). Want $60,000 a year at a 4% withdrawal rate? You'd need roughly $1,500,000 saved. Raise your target spending and the required portfolio scales up proportionally; lower your assumed withdrawal rate (to be more conservative about sequence-of-returns risk) and the required portfolio rises for the same spending, since you're asking a smaller percentage to cover the same dollar amount.