1. What is the 4% Rule?

The 4% rule is a guideline for retirement withdrawals that suggests you can withdraw 4% of your savings in the first year of retirement, then adjust that amount annually for inflation, without running out of money for at least 30 years.

2. How Does the Calculator Work?

The calculator uses the simple 4% rule formula:

Where:

• \( Balance \) — Your total retirement savings in USD
• \( 0.04 \) — The 4% withdrawal rate (4/100 = 0.04)

Explanation: This calculates your annual safe withdrawal amount based on your total savings.

3. Importance of Safe Withdrawal Rate

Details: The safe withdrawal rate helps retirees determine how much they can spend each year without depleting their savings too quickly, balancing current needs with future security.

4. Using the Calculator

Tips: Enter your total retirement savings in USD. The calculator will show your recommended annual withdrawal amount based on the 4% rule.

5. Frequently Asked Questions (FAQ)

Q1: Is the 4% rule guaranteed to work?
A: No, it's based on historical market performance and may not account for future market conditions or individual circumstances.

Q2: Should I adjust withdrawals for inflation?
A: Yes, the original 4% rule suggests adjusting the withdrawal amount annually for inflation.

Q3: Does this account for taxes?
A: No, the withdrawal amount is pre-tax. You'll need to account for taxes separately.

Q4: What if my portfolio is more conservative or aggressive?
A: The 4% rule assumes a balanced portfolio (typically 50-75% stocks). More conservative portfolios may require a lower withdrawal rate.

Q5: How long will my money last with 4% withdrawals?
A: The 4% rule was designed to make money last 30 years in most historical scenarios, but results can vary.