Getting Started - Four Percent Rule Analyzer

Which best describes you?

Choose the path that fits your situation:

Planning for Retirement

I'm saving for retirement and want to know how much I need to save

You'll get:

Your savings target amount
Required monthly contributions
Timeline to reach your goal

Ready to Retire

I have savings and want to know how much I can safely withdraw

You'll get:

Historical success rate analysis
Safe withdrawal recommendations
Asset allocation guidance

About the 4% Rule: A widely-used guideline suggesting you can withdraw 4% of your retirement savings annually (adjusted for inflation) with a high probability your money will last 30+ years. Learn more

All calculations happen in your browser. Your information stays private.

Step 1: Plan Your Retirement Savings

Let's calculate how much you need to save and how to get there.

New to the 4% Rule? Click to learn how it works

Understanding the 4% Rule

What is it? A retirement planning guideline developed by financial planner William Bengen in 1994, based on historical U.S. market data from 1926-1995. It has become the most widely-cited rule of thumb in retirement planning.

How it works: In your first year of retirement, you withdraw 4% of your total portfolio (e.g., $40,000 from a $1,000,000 portfolio). Each subsequent year, you adjust that dollar amount for inflation. So if inflation is 3%, you'd withdraw $41,200 in year 2, regardless of your portfolio's current value.

Why multiply by 25? To calculate your target savings, multiply your desired annual spending by 25 (since 100% ÷ 4% = 25). Examples:

Want $40,000/year? Need $1,000,000 saved (40,000 × 25)
Want $60,000/year? Need $1,500,000 saved (60,000 × 25)
Want $80,000/year? Need $2,000,000 saved (80,000 × 25)

Historical success: Bengen's research found that a 4% withdrawal rate, adjusted for inflation, would have lasted at least 30 years in every historical period tested, even including the Great Depression and multiple recessions. The 1998 Trinity Study (professors at Trinity University) validated these findings.

This calculator uses even more data: While Bengen used 1926-1995 data (69 years), our analysis extends through 2021, giving us 93 years of market history including the 2008 financial crisis and COVID-19 pandemic.

Important Limitations:

Assumes 30-year retirement: Longer retirements may need lower withdrawal rates
U.S. market focus: Based on U.S. stock and bond performance
Not a guarantee: Past performance doesn't predict future results
Taxes matter: Traditional 401k/IRA withdrawals are taxable; factor this into your spending needs
Simplified assumptions: Doesn't account for Social Security, pensions, healthcare costs, or individual circumstances

Sources: Bengen, W. (1994). "Determining Withdrawal Rates Using Historical Data." Journal of Financial Planning. | Cooley, P., Hubbard, C., & Walz, D. (1998). "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable." AAII Journal (Trinity Study).

How old are you now?

years old

When do you want to retire?

years old

That's 30 years from now

How much do you want to spend per year in retirement?

$ / year

In today's dollars (we'll account for inflation)

How much have you already saved? (optional)

Include 401k, IRA, and other retirement accounts. Enter 0 if starting from scratch.

Step 1: Tell Us About Your Retirement

Let's start with some basic information. Don't worry - this is completely private and stays on your device.

How much have you saved for retirement?

Include all retirement accounts (401k, IRA, savings, investments)

How much do you want to spend each year in retirement?

This amount will automatically adjust for inflation each year. Your withdrawal rate is calculated as: (annual spending ÷ total savings) × 100. What's this?

How much of your money should be in stocks vs. bonds?

All Bonds (Safer) All Stocks (Riskier)

60% Stocks / 40% Bonds

Not sure? 60% stocks / 40% bonds is a common balanced approach for retirees. More stocks = higher growth potential but more risk. More bonds = more stability but lower growth.

Try a Preset Scenario:

Step 2: Your Retirement Savings Plan

Your Retirement Target

Savings Needed

$1,000,000

Based on 4% withdrawal rule

Current Savings

$0

Gap to Close

$1,000,000

30 years to save

How to Reach Your Goal

Based on your timeline, here's how much you need to save annually:

Conservative Approach

4% annual growth (mostly bonds)

$25,000

per year

$2,083 / month

Balanced Approach Recommended

7% annual growth (60/40 stocks/bonds)

$15,000

per year

$1,250 / month

Important Notes:

These calculations assume steady market growth - actual returns vary year to year
Consider employer 401k matching (free money!) if available
Adjust savings as your income grows over time
These are estimates - consult a financial advisor for personalized planning
Remember to account for taxes on withdrawals from traditional retirement accounts

Understanding the Numbers

Why multiply by 25? The 4% rule suggests you need 25 times your annual spending saved. If you want $40,000/year, you need $1,000,000.

Why these specific growth rates? These are based on historical market performance after adjusting for inflation:

Investment Mix	Nominal Return	After Inflation	After Fees
Conservative (mostly bonds)	~5-6%	~4-5%	~4%
Balanced (60/40 stocks/bonds)	~9-10%	~7-8%	~7%

Historical averages (1928-2021):

U.S. Stocks (S&P 500): ~10% annual return (nominal), ~7% after inflation
U.S. Bonds (10-year Treasury): ~5% annual return (nominal), ~2% after inflation
Inflation (CPI): Averaged ~3% annually over this period

Why we adjust for inflation and fees:

Inflation: Historical average of 3% means $100 today buys what $97 bought last year. We subtract this to get "real" returns.
Fees: Index funds charge 0.03-0.20%, active funds 0.5-1.5%. We use ~1% as a reasonable estimate for a balanced portfolio.
Conservative estimate: We use 4% and 7% rather than higher numbers to be prudent - actual returns vary significantly year-to-year.

Sources: Historical returns from Ibbotson SBBI, Damodaran (NYU Stern), and Robert Shiller's stock market data. Inflation data from U.S. Bureau of Labor Statistics CPI-U.

Step 2: Here's What the 4% Rule Means for YOU

Analyzing your retirement plan against 93 years of historical market data...

What is the 4% Rule?

The 4% rule is a retirement planning guideline that suggests you can withdraw 4% of your retirement savings in your first year of retirement, then adjust that dollar amount for inflation each subsequent year, with a high probability that your money will last at least 30 years.

Where did it come from?

William Bengen (1994): Financial planner William Bengen published groundbreaking research in the Journal of Financial Planning analyzing historical U.S. market data from 1926-1995. He tested various withdrawal rates across different 30-year retirement periods and found that a 4% initial withdrawal rate, adjusted annually for inflation, would have survived every historical period tested.

Trinity Study (1998): Professors Philip Cooley, Carl Hubbard, and Daniel Walz at Trinity University validated and expanded Bengen's findings in their widely-cited study "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable," published in the AAII Journal.

How does it work in practice?

Example: $1,000,000 portfolio

Year 1: Withdraw $40,000 (4% of $1,000,000)
Year 2: Withdraw $41,200 (assuming 3% inflation)
Year 3: Withdraw $42,436 (3% inflation on $41,200)
And so on... Always adjusting for inflation, regardless of portfolio value

Note: The withdrawal amount increases with inflation each year, but the percentage withdrawn varies depending on your portfolio's performance. If your portfolio grows, the percentage decreases; if it shrinks, the percentage increases.

The Math: Why Multiply by 25?

To calculate your retirement savings target, multiply your desired annual spending by 25 (because 100% ÷ 4% = 25).

Annual Spending	Multiply by 25	Savings Needed
$30,000	$30,000 × 25	$750,000
$40,000	$40,000 × 25	$1,000,000
$60,000	$60,000 × 25	$1,500,000
$80,000	$80,000 × 25	$2,000,000

Important Assumptions & Limitations

The 4% rule assumes:

30-year retirement: If you retire at 65 and live to 95
Diversified portfolio: Mix of stocks and bonds (typically 50-75% stocks)
U.S. market performance: Based on historical U.S. stock and bond returns
No major changes: Consistent spending (adjusted for inflation only)
No additional income: Doesn't account for Social Security, pensions, or part-time work

Remember: This is a guideline, not a guarantee. Your actual safe withdrawal rate depends on when you retire (market conditions), how long your retirement lasts, your asset allocation, fees, taxes, and personal circumstances.

What makes this calculator different?

While Bengen's original research used 1926-1995 data (69 years), this calculator uses 93 years of historical data (1928-2021), including:

The Great Depression (1929-1939)
Black Monday crash (1987)
Dot-com bubble burst (2000-2002)
Financial crisis (2008-2009)
COVID-19 pandemic (2020)

We test your plan against 769 different 30-year retirement periods from this data, giving you a comprehensive view of how your strategy would have performed historically.

Which best describes you?

Planning for Retirement

Ready to Retire

Step 1: Plan Your Retirement Savings

Understanding the 4% Rule

Step 1: Tell Us About Your Retirement

60% Stocks / 40% Bonds

Step 2: Your Retirement Savings Plan

Your Retirement Target

$1,000,000

$0

$1,000,000

How to Reach Your Goal

Conservative Approach

$25,000

Balanced Approach Recommended

$15,000

Important Notes:

Understanding the Numbers

Great Job Planning Your Retirement!

Step 2: Here's What the 4% Rule Means for YOU

Your Plan:

$1,000,000

$40,000

4.0%

---%

What This Means for You:

The Historical Evidence:

Important Considerations:

This Looks Good:

Step 3: Explore Further

Want to Learn More?

Which best describes you?

Planning for Retirement

Ready to Retire

Step 1: Plan Your Retirement Savings

Understanding the 4% Rule

Step 1: Tell Us About Your Retirement

60% Stocks / 40% Bonds

Step 2: Your Retirement Savings Plan

Your Retirement Target

$1,000,000

$0

$1,000,000

How to Reach Your Goal

Conservative Approach

$25,000

Balanced Approach Recommended

$15,000

Important Notes:

Understanding the Numbers

Great Job Planning Your Retirement!

Step 2: Here's What the 4% Rule Means for YOU

Your Plan:

$1,000,000

$40,000

4.0%

---%

What This Means for You:

The Historical Evidence:

Important Considerations:

This Looks Good:

Step 3: Explore Further

Want to Learn More?

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