4% Rule Calculator
See how much your portfolio can safely pay you, per year and per month, and the portfolio you'd need for any target income. Results update as you type.
The 4% rule sets your first year of withdrawals at a fixed share of the starting portfolio and raises that amount with inflation afterwards. This page runs the arithmetic both ways: portfolio × rate gives the income, income ÷ rate gives the portfolio. At the shipped defaults a $1,000,000 portfolio at 4% pays $40,000 a year, or $3,333 a month, and a $40,000 income target needs 25 times spending. Move the rate slider and both sides move together. The rule comes from Bengen's 1994 paper, was tested across stock and bond mixes by the Trinity Study in 1998 and updated in 2011. See how our calculators work for how it is applied here.
| Withdrawal rate | Annual income | Portfolio for target income |
|---|---|---|
| 3% | $30,000 | $1,333,333 |
| 3.5% | $35,000 | $1,142,857 |
| 4% | $40,000 | $1,000,000 |
| 4.5% | $45,000 | $888,889 |
| 5% | $50,000 | $800,000 |
What is the 4% rule?
The 4% rule starts with William Bengen's 1994 paper in the Journal of Financial Planning and is usually quoted from the Trinity Study that followed, which tested how long a diversified stock/bond portfolio would have survived every historical retirement since 1926. Withdrawing 4% of the starting balance in year one, then adjusting that amount for inflation every year, a portfolio lasted at least 30 years in the vast majority of historical periods.
It's the reason the FIRE community talks about needing 25× your annual spending: 1 ÷ 4% = 25. Spend $40,000 a year and your FIRE number is $1,000,000.
Which withdrawal rate should you use?
- 3-3.5%, conservative. Suits very early retirees (40s) with 40-50 year horizons, or anyone who wants high certainty.
- 4%, the classic benchmark for a ~30-year retirement.
- 4.5-5%, aggressive. Reasonable with flexibility (part-time income, ability to cut spending) or a shorter horizon, risky otherwise.
Longer retirement, lower rate. If you're retiring at 45 rather than 65, lean conservative, or plan a Barista FIRE phase so your portfolio isn't doing all the work in the early years. The reason a bad opening decade matters so much is set out in sequence of returns risk, and the alternatives to a single fixed rate are compared in withdrawal strategies.
Frequently asked questions
Does the 4% rule include taxes?
No, the withdrawal is gross. Taxes depend on your account types (taxable vs tax-advantaged) and jurisdiction, so treat taxes as part of your annual spending when you set your target income.
Do dividends count toward the 4%?
Yes. The rule measures total withdrawals from the portfolio, whether they come from dividends, interest or selling shares.
What about market crashes right after retiring?
That's "sequence-of-returns risk," the main reason the rule isn't 6%. Buffers that help: a year or two of cash, flexible spending, or some part-time income early on.
More FIRE calculators
Sources and further reading
Rules and figures on this page are drawn from the primary sources below, so you can verify them directly rather than take our word for it.
- The Trinity Study: Cooley, Hubbard and Walz, AAII Journal, February 1998
- Bengen, W. P., Determining Withdrawal Rates Using Historical Data, Journal of Financial Planning, 1994 (FPA reprint, March 2004, member access), the origin of the 4% rule
- Cooley, Hubbard and Walz, Portfolio Success Rates: Where to Draw the Line, Journal of Financial Planning, 2011, the update
- How our calculators work, the formulas, defaults and tax year 2026 constants used on this site