Retirement & 4% Rule Calculator
Two questions, one tool: how big will your nest egg be at retirement — and how much can you withdraw each year without running dry? The famous 4% rule gives a starting answer.
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Your path to retirement
Try a different withdrawal rate
The 4% rule is a guideline. Drag the slider to see how 3–6% changes your annual income.
— per year
What is the 4% rule?
The 4% rule is a guideline for retirement withdrawals: in your first year of retirement, withdraw 4% of your portfolio, then adjust that dollar amount for inflation each year after. The idea is that this pace should let your money last about 30 years.
It comes from research by financial planner William Bengen, published in 1994 in the Journal of Financial Planning. Bengen tested withdrawal rates against actual U.S. market history (stocks and bonds, 1926–1992) and found that 4% survived even the worst 30-year stretches, including retirements starting right before the Great Depression. A follow-up 1998 study by three Trinity University professors — the "Trinity study" — reached similar conclusions and cemented the rule in popular finance.
The math in this calculator
Your nest egg is projected with the same monthly-compounding formula as our compound interest calculator:
Annual withdrawal = nest egg × withdrawal rate
Worked example
You're 35 with $80,000 saved, adding $1,000/month, earning 7%, retiring at 65 (30 years). The $80,000 grows to ~$649,000; the $360,000 of contributions grows to ~$1,220,000. Nest egg: roughly $1.87 million. At 4%, that's $74,800/year (~$6,230/month) before taxes — every year, adjusted for inflation.
Caveats worth knowing
- Built for 30 years. Retiring at 65 and living to 95 is 30 years — the rule fits. Retiring at 45 needs a longer runway, so many early retirees plan around 3–3.5%.
- Bengen himself has updated his thinking. In later interviews he suggested 4.5–5% can work with small-cap and other tweaks — but also that rigid rules beat flexible ones only if you actually follow them.
- It's backward-looking. The rule survived the worst past markets. Future returns, especially today's high valuations and lower bond yields, may differ — researchers at Morningstar revisit the "safe" rate annually.
- Taxes aren't modeled here. Withdrawals from traditional 401(k)s/IRAs are taxed as income; Roth withdrawals generally aren't. Your spendable income depends on account mix.
- Flexibility beats rigidity. In practice, retirees who trim spending after down years can sustain higher lifetime withdrawals than any fixed rule allows.
Sources: William P. Bengen, "Determining Withdrawal Rates Using Historical Data," Journal of Financial Planning (1994); Cooley, Hubbard & Walz, "Retirement Savings: Choosing a Withdrawal Rate," Journal of the American Association of Individual Investors (1998, the "Trinity study"); U.S. SEC investor.gov.