4% Rule Calculator: Safe Withdrawal Rate Since 1872

It's a rule of thumb for how much you can spend from savings each year. You take 4% of your balance in year one, then raise that dollar amount by inflation every year, whatever the market does. It comes from William Bengen's 1994 study of US market history, which found 4% lasted at least 30 years in every period he tested. The Trinity study in 1998 reached a similar result.

Multiply your savings by 0.04 to get your first year's spending. $1,000,000 gives $40,000, and $600,000 gives $24,000. In year two, raise that amount by inflation, not by your new balance. Flip it to find what you need: divide your yearly spending by 0.04, or multiply it by 25. $50,000 a year needs $1,250,000.

In US history since 1872, a 60/40 portfolio at 4% lasted 30 years in 121 of 125 periods. The worst start, 1966, ran out in year 26. Most retirements ended with more than they started: the median was $1,360,459 in today's dollars on a $1,000,000 start. Set the years in the calculator to see your odds over 35, 40 or 50 years.

It held up in every 30-year period on record except four starts in the late 1960s: 96.8% in our test. Critics point to high stock prices and lower expected bond returns, and some planners suggest 3.5% to 3.8% for safety. Others argue 4.5% or more works with flexible spending. The calculator lets you test any rate against the same history.

Lower than 4%, because your money has to last longer. In our data, the highest rate that survived every 40-year period was 3.48%, and every 50-year period 3.31%, with a 60/40 mix. Many early retirees plan on 3.25% to 3.5%. At $40,000 a year, 3.5% means saving about $1,142,857 instead of $1,000,000.

The years you need to fund set the rate, more than your age. Retire at 65 with a 30-year horizon and about 3.75% held up in every past period, and 4% in almost every one. Retire at 55 and plan for 40 years, and the past safe rate falls to about 3.5%. Retire at 45 with 50 years to fund, and it's about 3.3%. Enter your years and the calculator shows the highest rate that lasted.

Mixes from about 50% to 75% stocks did best in history. In our test, 60% stocks lasted in 96.8% of 30-year periods, and 100% stocks did the same with a lower safe rate of 3.65%. 30% stocks dropped to 89.6%. All bonds lasted only 49.6% of the time, because bonds rarely beat inflation by much over 30 years.

Yes. You raise your spending by inflation every year, so your buying power stays the same. Our results use real returns, after inflation, so every balance on the page is in today's dollars. From 1966 to 1981, inflation pushed spending up while stocks went nowhere, which is why retirements that began then did worst.

The odds fall fast. Spending $50,000 a year from $1,000,000, a 5% rate, lasted 30 years in only 94 of 125 past periods: 75.2%. Spending $35,000, a 3.5% rate, lasted in all 125.

They change your spending with your balance instead of fixing it. A fixed percentage takes 4% of whatever you have each year, so it never runs out but your income swings. Guardrails cut spending 10% when your rate drifts 20% above where it started, and raise it 10% when it drifts 20% below. A floor and ceiling version follows your balance but limits each year's change. In our test, all three lasted in all 125 periods, with the lowest year's spending between about $16,500 and $21,400 on a $40,000 start.

They cut what your savings must cover. Under More options, add yearly income and the year it starts. Spending $60,000 with $20,000 of Social Security starting in year 5 lasted in 91.2% of past 30-year periods from $1,000,000. Without that income, $60,000 would be a 6% rate and fail far more often.