4% Rule Retirement Withdrawal Calculator

Enter the portfolio balance you intend to draw from when retirement begins. The calculator applies the withdrawal rate to that initial balance only. With the defaults of $1,000,000 and 4%, the first-year withdrawal is $40,000, or $3,333 per month. The monthly figure is the annual amount divided by 12; the model withdraws once per year.

Set retirement age and life expectancy to define the projection period. Ages 65 to 95 produce 30 years — the same horizon Bengen used in his original research. If life expectancy is at or below retirement age, the calculator runs a minimum one-year projection. "Life expectancy" here is your planning endpoint, not an actuarial estimate. A longer endpoint stress-tests the same spending plan over more years.

"Annual Return" is a single constant return applied every year to the balance after that year's withdrawal. Enter a nominal return after any investment fees. The advanced "Inflation Rate" raises the withdrawal dollar amount by the same percentage each year. Keep return and inflation assumptions consistent: a nominal investment return belongs with a nominal inflation rate.

The model takes the year's planned withdrawal at the start of the year, limits it to the available balance, grows the remainder by the entered annual return, and increases next year's planned withdrawal for inflation.

first-year withdrawal    = initial portfolio × withdrawal rate
actual annual withdrawal = min(planned withdrawal, current balance)
year-end balance         = (current balance − actual withdrawal) × (1 + annual return)
next planned withdrawal  = current planned withdrawal × (1 + inflation rate)

Worked example at defaults ($1,000,000 portfolio, 4% rate, 6% return, 2.5% inflation):

Math: Year 1 withdrawal = $1,000,000 × 0.04 = $40,000. Remainder = $960,000 × 1.06 = $1,017,600. Year 2 withdrawal = $40,000 × 1.025 = $41,000.

The dollar withdrawal rises with inflation — it is not recalculated as 4% of the remaining portfolio each year. That distinction is critical: a constant-percentage-of-balance strategy produces variable income, while the 4% rule produces predictable income that may eventually exhaust the portfolio.

The comparison table runs the same calculation at 3%, 3.5%, 4%, 4.5%, and 5%, plus your selected rate if different. "Years Lasted" counts complete years before depletion. A plus sign means the balance was still positive at the planning endpoint.

The 4% rule originated from William Bengen's 1994 research published in the Journal of Financial Planning. Bengen tested every historical 30-year retirement period using actual U.S. stock and bond returns (50/50 allocation) and actual inflation from 1926 onward. He found that a 4% initial withdrawal, adjusted annually for inflation, survived every historical period without running out of money. The worst starting year was 1966, when high inflation and poor stock returns nearly depleted the portfolio by year 30.

Key facts about the original research:

• Asset allocation tested: 50% large-cap U.S. stocks, 50% intermediate-term U.S. government bonds
• Time period: Every rolling 30-year window from 1926–1992
• Result: 4% was the highest rate that survived the worst historical period (the "SAFEMAX")
• Bengen's later update: Adding small-cap stocks improved the SAFEMAX to approximately 4.5%

Read Bengen's original paper (PDF) · 4% rule explained

This calculator differs from Bengen's method. It uses a constant annual return, while Bengen tested against actual variable historical returns. A constant 7% return every year is far smoother than real markets, where a −30% year followed by recovery produces a very different outcome than steady 7%. This matters because of sequence-of-returns risk (see below).

Since 1994, multiple researchers have revisited the 4% rule:

• Wade Pfau (2010s): Testing with international market data and lower expected future returns suggested safe withdrawal rates closer to 3.0%–3.5% for non-U.S. investors or when starting with high stock valuations.
• Morningstar (2023–2024): Annual updates modeling current bond yields and market conditions have placed the safe starting rate between 3.7% and 4.0%.
• Bengen himself (2006+): Updated his analysis to include small-cap stocks and extended the data through more recent periods, finding the SAFEMAX closer to 4.5% with a broader allocation.

The range most researchers now cite is 3.3%–4.5%, depending on:

• Asset allocation (more bonds = lower safe rate)
• Retirement length (40+ years = lower safe rate)
• Market valuations at retirement (high CAPE ratio = lower safe rate)
• Willingness to adjust spending in bad years (flexibility = higher safe rate)

For a dynamic approach that adjusts withdrawals based on market performance, use the Guyton-Klempner guardrail calculator.

Start with the first-year annual withdrawal and ask whether it covers your spending gap after Social Security, pensions, and other reliable income. The retirement income calculator can place those sources alongside portfolio withdrawals to show the full picture.

Example: You need $65,000/year in retirement. Social Security provides $28,000/year (estimate yours). Your spending gap is $37,000. At 4%, you need $37,000 ÷ 0.04 = $925,000 in portfolio savings.

Then compare "Years Covered" with your planning horizon. The chart and year-by-year table show where the balance rises, stays flat, or depletes. Test lower returns, higher inflation, and a longer life to see how sensitive the result is. A plan that works at 7% return may fail at 5%.

An ending balance is the projected nominal amount, not today's purchasing power. A $500,000 balance in 30 years buys roughly what $232,000 buys today (at 2.5% inflation). For spending analysis with more detail, use the retirement withdrawal calculator or the retirement spending calculator.

Sequence-of-Returns Risk

The tool applies the same return every year, so it cannot show the most dangerous threat to withdrawal plans: a loss early in retirement. If your portfolio drops sharply in year one while you're withdrawing 4%, the combined hit can be unrecoverable — even if long-term average returns are adequate.

Example with $1,000,000 portfolio, 4% initial withdrawal, 2.5% inflation:

Scenario B is a stress scenario, not a claim that its returns match the constant-return case. After each start-of-year withdrawal and subsequent annual return, it can fully fund 22 years but cannot fund the planned withdrawal in year 23. The sequence matters because withdrawals continue after early losses.

Another comparison — same average return, different ordering:

These scenarios use the same set of annual returns in a different order. Under the withdrawal timing described above, the early loss leaves about $1,517,628 less at year 30. This illustrates sequence risk; it is not a forecast.

This is why Bengen's historical testing (which includes real sequence risk) is more meaningful than a constant-return projection. Use the Monte Carlo retirement calculator to simulate thousands of variable-return scenarios.

Taxes

Withdrawals are shown before income taxes. The tax treatment depends on the account type and your individual circumstances:

• Traditional 401(k)/IRA: Pre-tax contributions and earnings are taxed as ordinary income when withdrawn. If you made after-tax (non-deductible) contributions, that portion is not taxed again — see IRS Topic 451 for details.
• Roth 401(k)/IRA: Qualified withdrawals (account open 5+ years, age 59½+) are tax-free (IRS: Roth distributions)
• Taxable brokerage: Only the gain above your cost basis is taxed, generally at long-term capital gains rates for assets held over one year

Illustrative example (flat-rate simplification): If you need $40,000 to spend from a fully pre-tax traditional 401(k) and your marginal federal rate is 22%, you would need to withdraw approximately $40,000 ÷ 0.78 ≈ $51,300 to net $40,000 after federal tax. This ignores state taxes, other income, deductions, and the progressive bracket structure — your actual tax will depend on your full tax picture. The 401(k) withdrawal tax calculator and tax-efficient withdrawal calculator can model this more precisely. Read how to withdraw from retirement accounts tax-efficiently and the best order to withdraw from retirement accounts.

Other Factors Not Modeled

• No additional deposits or one-time expenses (home repair, medical bills, helping family)
• No Required Minimum Distributions (RMDs start at age 73 or 75 and may force withdrawals larger than 4%)
• No Social Security or pension income (enter only the portfolio you'll draw from)
• No spending changes (most retirees spend more early in retirement and less later)
• No investment fees beyond what you build into the return rate

The 4% rule is the simplest approach, but not the only one:

Use the safe withdrawal rate calculator to compare rates, or the retirement withdrawal strategy calculator for a broader analysis.

The 4% rule is a starting point, not a complete retirement plan. Once you've tested your withdrawal rate here, layer in your other income sources with the retirement income calculator and stress-test against market volatility with the Monte Carlo calculator. If you haven't estimated your total retirement need yet, start with how much do I need to retire or the retirement savings calculator.

For a deeper understanding of withdrawal ordering — which accounts to tap first — read the best order to withdraw from retirement accounts.