95%+ success rate
The 4% rule: how much can you safely withdraw?
The 4% rule, derived from the 1998 Trinity Study, says a portfolio invested 50-75% in stocks can sustain 4% annual withdrawals (adjusted for inflation) for 30 years with a 95%+ success rate. A $1,000,000 portfolio supports $40,000/year indefinitely under this rule. Use 3-3.5% for retirements longer than 30 years; sequence-of-returns risk in early retirement is the biggest threat.
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Try calculatorKey takeaways
04 · ideas- 4% rule comes from the 1998 Trinity Study
- $1M portfolio → $40,000/year indefinitely
- Use 3–3.5% for retirements longer than 30 years
- Sequence of returns risk is the biggest threat
The 4% rule is a retirement planning guideline: if you withdraw 4% of your portfolio in year one, then adjust for inflation each year, historical data shows your money will last at least 30 years in 95%+ of scenarios.
The simple math:- $500,000 portfolio → $20,000/year
- $1,000,000 portfolio → $40,000/year
- $2,000,000 portfolio → $80,000/year
This means your FIRE number — the amount you need to retire — is simply your annual expenses × 25.
If you spend $50,000/year, you need $1,250,000.