The 4% rule is the most famous shorthand in retirement planning: it says you can withdraw about 4% of your starting balance in the first year, adjust that amount for inflation each year, and have a high chance of your money lasting 30 years. Flip it around and it becomes a target — you need roughly 25× your annual spending saved.
This calculator leads with that target. Tell it what you want to spend, and it shows the nest egg the 4% rule implies, with the 25× cross-check alongside.
Where the 4% rule comes from
It traces to the 1990s “Trinity study,” which tested historical 30-year retirements across U.S. stock and bond returns. A 4% initial withdrawal, rising with inflation, survived almost every historical period with a balanced portfolio — hence the rule. The 25× target is just its mirror image: 1 ÷ 0.04 = 25.
So for $60,000 of annual spending, the rule points to a $1.5 million nest egg. If Social Security or a pension covers part of that spending, your own savings only need to fund the remainder — which is why your real target is often much lower.
The rule’s limitations
It’s a guideline, not a guarantee. It was built on a 30-year horizon and U.S. history; early retirees planning for 40+ years, or anyone expecting lower future returns, may want a more conservative 3.0–3.5%. Today’s valuations and bond yields differ from the past, and the rule ignores taxes and fees.
It’s also rigid: real retirees adjust. Spending a little less in down markets — rather than mechanically raising withdrawals with inflation — dramatically improves the odds. Treat 4% as a sensible anchor, then flex.
Using a different rate
Lower the withdrawal rate in the assumptions and the target nest egg rises: at 3.5% you need about 28.6× spending; at 5% just 20×. Higher rates demand a smaller pot but carry more risk of running out, especially over long retirements.
There’s no universally correct number — it’s a trade-off between the size of the nest egg you need and the safety margin you want. The calculator makes that trade-off visible so you can choose deliberately.
Frequently asked questions
What is the 4% rule?
It’s a guideline that you can withdraw about 4% of your starting retirement balance in year one, adjust that dollar amount for inflation each year, and likely not run out over 30 years. It implies a target of roughly 25× your annual spending.
How much do I need to retire using the 4% rule?
About 25× the annual spending your savings must cover. For $60,000 a year that’s $1.5 million — but if Social Security covers part of your spending, your own savings target is lower. Enter your numbers above to see it.
Is the 4% rule still safe?
It’s a reasonable anchor, but it’s not a guarantee. It assumes a 30-year retirement and U.S. historical returns; long early retirements or lower expected returns may warrant 3.0–3.5%. Flexibility in down years improves the odds.
How do I calculate a safe withdrawal amount?
Multiply your balance by your chosen rate: 4% of $1 million is $40,000 in year one, rising with inflation thereafter. Adjust the rate in the assumptions to be more cautious or aggressive.
Worked examples
Each scenario below is computed by the same retirement engine that powers the interactive calculator above — no hand-typed numbers.
Classic 4% rule — $1M portfolio
Retiree at 65 with exactly $1,000,000, withdrawing 4% ($40,000/year) plus $2,000/month Social Security for a $64,000 total income.
Projected nest egg
$1,000,000
Required (today's $)
$801,573
Funded ratio
125%
Monthly income
$5,333/mo
A $1M portfolio at exactly 4% SWR is the textbook scenario. The funded ratio reveals whether it truly lasts 25 years at your assumed return and inflation.
Conservative 3.5% rule — longer horizon
Early retiree at 55 with $1.5M, 3.5% SWR ($52,500/year portfolio draw), $0 other income until Social Security at 70.
Projected nest egg
$1,500,000
Required (today's $)
$1,515,305
Funded ratio
99%
Monthly income
$4,375/mo
For a 37-year retirement, 3.5% is more defensible than 4%. No Social Security modeled here — the portfolio must cover everything until age 70.
More retirement questions
Is the 4% rule still valid?
The 4% rule remains a useful starting framework, but many researchers have revised it downward due to current low bond yields and stretched equity valuations. William Bengen, who originally proposed the rule, now cites 4.5–4.7% as sustainable with flexible spending. Morningstar's 2022 research suggested 3.3% for a 30-year horizon with a 90% success probability. The consensus: 4% is reasonable for a 30-year standard retirement with moderate flexibility.
What is the 25x rule for retirement?
The 25x rule states that you need 25 times your annual portfolio-funded spending to retire sustainably. It's the mathematical inverse of the 4% safe withdrawal rate (1 ÷ 0.04 = 25). If you need $50,000/year from your portfolio, you need $1,250,000. Crucially: this applies to the spending your portfolio covers — not your total spending. Net out Social Security and pension first.
What this calculator does — and does not — compute
Retirement projections involve inputs that come from government agencies, employers, and tax rules this tool cannot access. Here is exactly what you are providing versus what this calculator handles on its own.
- 1.Social Security is not calculated here. You enter your own monthly estimate in the “Other monthly income” field. This tool does not access your earnings record or apply Social Security benefit formulas. To get your actual personalized estimate, create a free account at ssa.gov/myaccount.
- 2.Required Minimum Distributions (RMDs) are not modeled. The drawdown projection shows balance depletion under your stated withdrawal rate, but it does not enforce IRS RMD schedules (which begin at age 73 for most accounts) or calculate RMD amounts from IRS life-expectancy tables. If RMDs apply to you, actual withdrawals may differ from the projection shown.
- 3.Pension income is an input you provide, not a computed output. If you have a defined-benefit pension, enter your expected monthly payment in “Other monthly income.” This tool does not compute pension formulas (FERS, CalPERS, military, state, or private plan formulas) and does not connect to any employer or government pension system.
- 4.Withdrawal tax treatment is simplified and illustrative. The projection shows gross withdrawals from your portfolio. It does not calculate federal or state income taxes on traditional 401k or IRA distributions, does not model Roth tax treatment, and does not account for RMD-driven bracket changes. Actual after-tax income will differ. For tax planning specific to your situation, consult a qualified tax professional.
- 5.Any depletion result is a projection, not a guarantee. “How long your money lasts” and similar outputs are calculated under your stated return rate, inflation rate, and spending assumptions. Actual outcomes depend on market performance, sequence of returns, unexpected expenses, and life events that cannot be modeled in advance. A projection is a planning tool, not a promise.
This calculator is for educational and planning purposes only. It does not constitute financial, tax, or investment advice.