The 4% rule suggests that you can withdraw 4% of your portfolio in the first year of retirement, then adjust that dollar amount for inflation each year, with a high likelihood of lasting 30 years.
Where it came from
The idea comes from financial planner William Bengen's 1994 research and the later Trinity study, which tested historical stock and bond returns. A $1 million portfolio supports $40,000 in the first year under the rule.
Limitations
The rule assumes a 30-year retirement and a balanced stock-and-bond portfolio. Early retirees with 40–50 year horizons may want a lower rate. Future returns could differ from the past, and the rule ignores taxes, fees and spending changes.
Flexible alternatives
Guardrail strategies raise or cut withdrawals depending on portfolio performance. Others use a percentage of the current portfolio or a floor-and-upside approach. Social Security and pensions reduce how much you need from the portfolio.
Try the numbers
Use our 4% Rule Withdrawal Calculator to see this in practice. With its default example (Portfolio at retirement: $1,200,000; Initial withdrawal rate: 4%; Inflation: 2.7%), it shows first-year withdrawal: $48,000. Adjust the inputs to match your situation.
Key takeaways
- The 4% rule is a starting point, not a guarantee.
- Longer retirements may call for a lower rate.
- Flexible withdrawals improve success odds.
This article is for general education and is not personalized financial, tax or legal advice. Rules and limits change; confirm current figures with official sources such as IRS.gov, SSA.gov and StudentAid.gov, or consult a qualified professional. © 2026 FinanzCalc.