1. What is the 4 Percent Rule?

The 4 Percent Rule is a retirement planning guideline that suggests retirees can safely withdraw 4% of their savings annually without running out of money over a 30-year retirement period.

2. How Does the Calculator Work?

The calculator uses the 4 Percent Rule formula:

Where:

• \( WR \) — Annual withdrawal amount ($)
• \( S \) — Total savings amount ($)
• \( 0.04 \) — 4% withdrawal rate

Explanation: The rule assumes a balanced investment portfolio and aims to provide sustainable income throughout retirement.

3. Importance of the 4 Percent Rule

Details: This rule helps retirees plan their withdrawals to ensure their savings last throughout retirement while maintaining their standard of living.

4. Using the Calculator

Tips: Enter your total retirement savings in dollars. The calculator will compute your safe annual withdrawal amount based on the 4% rule.

5. Frequently Asked Questions (FAQ)

Q1: Is the 4 Percent Rule still valid today?
A: While still a useful guideline, some experts suggest a lower withdrawal rate (3-3.5%) due to lower expected returns and longer lifespans.

Q2: Does the rule account for inflation?
A: Yes, the 4% rule typically includes annual inflation adjustments to maintain purchasing power.

Q3: What investment return does this rule assume?
A: The original study assumed a portfolio of 50-75% stocks with average annual returns of 7% after inflation.

Q4: How long will my money last with this rule?
A: The 4% rule was designed to provide income for 30 years with a high probability of success (95%+).

Q5: Should I adjust my withdrawal rate based on market conditions?
A: Many financial advisors recommend flexible withdrawal strategies that can be adjusted based on market performance and personal circumstances.