4% Rule Retirement Calculator
Estimate how much you can safely spend each year from your retirement savings.
Safe annual spending
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How to use this tool
- Enter the total value of your retirement savings: the combined balance of your 401(k), IRA, pension pot, and any other invested funds you plan to draw from.
- Set a withdrawal rate. It defaults to 4 percent, the figure behind the original safe retirement withdrawal rate research, but you can lower or raise it.
- Click Calculate to see your safe annual spend, then the monthly and weekly amounts it works out to.
- Try a few rates to compare. A lower rate stretches your money further; a higher rate increases the risk of running out.
The formula
This 4 percent rule calculator uses one short piece of math. Your annual safe spend is simply your portfolio value multiplied by the withdrawal rate, divided by 100. The monthly figure is that annual number split across twelve months.
The 4 percent rule comes from the Trinity study, which found that retirees who withdrew 4 percent of their starting balance in year one, then adjusted that amount for inflation each year, rarely ran out of money over a 30-year retirement. It is a quick gauge of retirement income safety, not a guarantee.
A real example
Imagine you retire with a 1,000,000 dollar portfolio and use the standard 4 percent rate. Your safe annual spend is 1,000,000 x 0.04 = 40,000 dollars, which is about 3,333 dollars a month. If you worried that 4 percent was too aggressive and dropped to 3.5 percent, your annual figure falls to 35,000 dollars, or roughly 2,917 dollars a month, leaving a bigger safety margin in case markets fall early in retirement.
Common questions
What is the 4 percent rule?
It is a guideline that says you can withdraw 4 percent of your retirement portfolio in the first year, then adjust that dollar amount for inflation each year, with a good chance the money lasts about 30 years. It is the most common starting point for a safe retirement withdrawal rate.
How long will my pension pot last at 4 percent?
The 4 percent rule was designed to support roughly a 30-year retirement based on historical market returns. Real outcomes vary with investment performance, inflation, and the order of good and bad return years, so treat 30 years as a planning estimate rather than a promise.
Should I use a rate lower than 4 percent?
Many planners now suggest 3 to 3.5 percent for early retirees or those expecting longer-than-average lifespans, since a lower rate improves retirement income safety. Use this calculator to compare a few rates and see how each changes your annual and monthly budget.
Does this account for taxes and inflation?
No. The result is a gross figure before income tax, and it shows your first-year withdrawal. In practice you would increase the dollar amount each year to keep pace with inflation, and you should set aside part of each withdrawal for taxes on tax-deferred accounts.
Is this calculator financial advice?
No. It is an educational estimate to help you picture your retirement spending. Your safe withdrawal rate depends on your time horizon, investment mix, other income such as Social Security, and personal risk tolerance, so consult a qualified financial professional before making decisions.