1. What is the 4% Rule?

The 4% Rule is a retirement planning guideline that suggests retirees can safely withdraw 4% of their initial retirement portfolio each year, adjusted for inflation, without running out of money for at least 30 years.

2. How Does the Calculator Work?

The calculator uses the 4% Rule formula:

Where:

• \( Nest Egg \) — Total retirement savings
• \( 0.04 \) — The 4% withdrawal rate

Explanation: This calculation provides the annual withdrawal amount that should theoretically allow your retirement savings to last for 30 years.

3. Importance of the 4% Rule

Details: The 4% rule provides a simple guideline for retirement planning, helping individuals estimate how much they can safely spend each year without depleting their retirement savings too quickly.

4. Using the Calculator

Tips: Enter your total retirement savings (nest egg) in your preferred currency. The calculator will compute your recommended annual withdrawal amount based on the 4% rule.

5. Frequently Asked Questions (FAQ)

Q1: Is the 4% rule guaranteed to work?
A: The 4% rule is based on historical market data and is not a guarantee. Market conditions, inflation rates, and individual circumstances can affect its success.

Q2: Should I adjust for inflation?
A: Yes, the traditional 4% rule includes annual inflation adjustments to maintain purchasing power throughout retirement.

Q3: Does the 4% rule work for early retirement?
A: For retirement periods longer than 30 years, a lower withdrawal rate (3-3.5%) may be more appropriate to ensure funds last.

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

Q5: Should I recalculate annually?
A: While the 4% rule typically uses the initial portfolio value, some strategies adjust based on current portfolio value each year.