What Is the 4% Rule for Retirement? Does It Still Work?
Automated technical check: . Scope and review policy
The 4% rule is a historical retirement-withdrawal guideline, not an interest rate, guaranteed yield or assurance that a portfolio will last. A first-year withdrawal of 4% is followed by inflation adjustments to that dollar amount; it is not the same as withdrawing 4% of the changing balance every year.
Open the retirement calculator to explore contributions and simplified withdrawal assumptions. It is not a historical portfolio backtester.
What the rule says
For an initial $1,000,000 portfolio, a 4% first-year withdrawal is $40,000. If the following year's inflation adjustment were 3%, the next withdrawal would be $41,200 regardless of that year's portfolio value. This describes a spending rule, not a prediction.
Where the research came from
William Bengen's 1994 research examined historical withdrawal sustainability. The separate Trinity Study by Philip Cooley, Carl Hubbard and Daniel Walz was published in the AAII Journal in February 1998. It tested different stock/bond allocations, withdrawal rates, payout periods and historical starting dates. The 1994 paper should not be attributed to the Trinity authors.
The Trinity analysis excluded taxes and transaction costs. Its historical success rates depended on the tested portfolio, withdrawal method and horizon. They are not probabilities guaranteed to apply to a future retirement.
Check a simple boundary case
With $1,000,000, $40,000 withdrawn annually, no inflation and zero return, the shared simulator supports 25 full years. This is an arithmetic check, not a reproduction of the historical studies.
Why your result can differ
- A longer horizon exposes the portfolio to more years of spending and market outcomes.
- Negative early returns can have a different effect from the same average return in a different order.
- Fees, taxes, asset allocation and inflation affect available spending.
- Flexible spending changes the question being modeled; it is not the original fixed-real-spending rule.
There is no single withdrawal percentage this site can certify as safe for everyone. A personal spending plan needs current primary research and qualified advice appropriate to your circumstances, not just a historical percentage.
Sources and calculator limits
- Cooley, Hubbard and Walz, Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable, February 1998
- Bengen, Determining Withdrawal Rates Using Historical Data, 1994 (2004 reprint)
These are deterministic illustrations, not independent professional review. Read how long savings may last for withdrawal timing, horizon and inflation limits.