Retirement Planning
Safe Withdrawal Rate Calculator
Understand the 4% rule and calculate how much you can safely withdraw in retirement without running out of money.
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What is a Safe Withdrawal Rate?
A safe withdrawal rate (SWR) is the percentage of your investment portfolio you can withdraw each year in retirement with a high probability of not running out of money. The most famous SWR is 4%, often called "the 4% rule."
The concept answers a critical retirement question: "How much can I spend each year without depleting my savings?"
4%
Traditional SWR
~95% success rate over 30 years
3.5%
Conservative SWR
Better for 40+ year retirements
5%
Aggressive SWR
Higher spending, higher risk
The 4% Rule Explained
The 4% rule says you can withdraw 4% of your portfolio in the first year of retirement, then adjust that amount for inflation each year. Historically, this approach has a very high success rate over 30-year periods.
# Year 1
$1,000,000 × 4% = $40,000 withdrawal
# Year 2 (assuming 3% inflation)
$40,000 × 1.03 = $41,200 withdrawal
# Year 3
$41,200 × 1.03 = $42,436 withdrawal
Key insight: The 4% rule means you need 25× your annual expenses saved for retirement. If you spend $50,000/year, you need $1,250,000 (because $1,250,000 × 4% = $50,000).
The Trinity Study: Where the 4% Rule Comes From
The 4% rule originates from a 1998 study by three professors at Trinity University (Cooley, Hubbard, and Walz). They analyzed historical market data from 1926-1995 to determine sustainable withdrawal rates.
Key Findings from the Trinity Study
- ✓ A 4% withdrawal rate with a 50/50 stock/bond portfolio had a 95% success rate over 30 years
- ✓ Higher stock allocations (75%) improved success rates for longer retirements
- ✓ Withdrawal rates above 5% had significantly higher failure rates
- ✓ Inflation-adjusted withdrawals are sustainable at 4% for most historical periods
Note: The Trinity Study has been updated multiple times with newer data, and the conclusions remain largely consistent. See our methodology page for our data sources.
Withdrawal Rate Success Rates
"Success" means not running out of money. These rates are based on historical simulations using actual market returns.
| Withdrawal Rate | 20 Years | 30 Years | 40 Years |
|---|---|---|---|
| 3% | 100% | 100% | 100% |
| 3.5% | 100% | 98% | 96% |
| 4% (Traditional) | 100% | 95% | 87% |
| 4.5% | 98% | 85% | 72% |
| 5% | 94% | 75% | 58% |
Based on historical simulations with 75% stocks / 25% bonds allocation. Individual results may vary.
Variable Withdrawal Strategies
The traditional 4% rule uses fixed inflation-adjusted withdrawals. More sophisticated strategies adjust withdrawals based on portfolio performance, potentially improving success rates and/or allowing higher withdrawals.
Guardrails Strategy
Set upper and lower "guardrails" around your target withdrawal. If your portfolio grows significantly, increase spending. If it drops, temporarily reduce spending.
Percentage of Portfolio
Withdraw a fixed percentage of your current portfolio value each year, rather than a fixed dollar amount. Spending fluctuates but you can never fully deplete your portfolio.
Floor and Ceiling
Use percentage-of-portfolio withdrawals but set minimum (floor) and maximum (ceiling) amounts to avoid extreme swings in spending.
Bond Tent / Rising Equity Glidepath
Start retirement with higher bond allocation (50-60%), then gradually increase stocks over time. Protects against sequence of returns risk in early retirement when you're most vulnerable.
Understanding Sequence of Returns Risk
The biggest threat to your retirement isn't average returns—it's the order of returns. Poor returns in your first few years of retirement, combined with withdrawals, can devastate your portfolio.
Good Sequence
+15%, +12%, +8%, then -20%, -15%
Strong early returns build a buffer that absorbs later losses.
Result: Portfolio survives
Bad Sequence
-20%, -15%, then +15%, +12%, +8%
Early losses + withdrawals = less money to recover with.
Result: Portfolio may fail
Protection strategies: Keep 2-3 years of expenses in cash/bonds, be flexible with early withdrawals, consider part-time income in early retirement, or use a bond tent strategy.
Which Calculator Should You Use?
Basic FIRE Calculator
Quick estimate of when you'll reach financial independence. Uses constant return assumptions. Great for initial planning and goal setting.
→ Use Basic CalculatorAdvanced FIRE Calculator
Models retirement drawdown with taxes, early withdrawal penalties, and sequence of returns risk. Best for detailed retirement planning.
→ Use Advanced CalculatorModel Your Retirement Withdrawals
Our advanced calculator simulates your retirement with sequence of returns risk and tax considerations.