What is the 4% rule for retirement withdrawals?

The 4% rule suggests withdrawing 4% of your starting retirement balance in year one and adjusting for inflation each year. Historically, this rate has sustained portfolios for 30-year retirements with a balanced stock-bond allocation. A $1,000,000 portfolio following the 4% rule would withdraw $40,000 in year one, $41,200 in year two (if inflation is 3%), and so on. Use the [retirement withdrawal calculator](/tools/finance/retirement-withdrawal) to test the 4% rule with your numbers.

How do I know if my withdrawal rate is sustainable?

A sustainable withdrawal rate is one that does not exhaust your portfolio before the end of your expected lifespan. Use the calculator to project how many years your savings will last at different withdrawal rates and investment returns. If the balance drops to zero before age 90 or 100, reduce withdrawals. If the balance grows over time, your rate is conservative and you can increase withdrawals or leave more to heirs.

What investment return should I assume?

A balanced portfolio of 60% stocks and 40% bonds historically returns 6% to 7% per year before inflation. A conservative portfolio of 80% bonds returns 4% to 5%. An aggressive portfolio of 80% to 100% stocks may return 8% to 10% but with higher volatility. Use the [compound interest calculator](/tools/finance/compound-interest-calculator) to see how different return rates compound over time. For retirement planning, use a conservative estimate to avoid overstating portfolio longevity.

Should I adjust my withdrawals each year for inflation?

Yes. If you withdraw a fixed dollar amount each year without adjusting for inflation, your purchasing power declines. Most retirees increase withdrawals by the inflation rate each year to maintain the same standard of living. If inflation is 3%, a $40,000 withdrawal in year one becomes $41,200 in year two. The calculator accounts for inflation-adjusted withdrawals when you enter an inflation rate.

What happens if the market crashes early in retirement?

A market downturn in the early years of retirement is the biggest risk to portfolio longevity. When you withdraw from a declining portfolio, you sell assets at depressed prices, leaving less principal to recover when markets rebound. This is called sequence-of-returns risk. To mitigate it, hold one to two years of withdrawals in cash or bonds, so you do not sell stocks during a crash. Test downside scenarios in the calculator by using a lower expected return.

Can I withdraw more than 4% if I retire later?

Yes. If you retire at 70 instead of 65, your life expectancy is shorter, so you can withdraw at a higher rate. A 70-year-old might safely withdraw 5% to 6% per year because the portfolio only needs to last 20 to 25 years instead of 30. The calculator shows how different withdrawal rates affect portfolio longevity. Adjust your rate based on your actual life expectancy, not a generic 30-year assumption.

What if my portfolio grows faster than I withdraw?

If investment returns exceed your withdrawal rate plus inflation, your portfolio balance grows even as you withdraw income. This is a good problem to have. You can increase your annual withdrawals, leave more to heirs, or donate the surplus. A person withdrawing 4% from a portfolio returning 7% per year will see the balance grow over time. Use the [retirement withdrawal calculator](/tools/finance/retirement-withdrawal) to model this scenario.

Should I include Social Security or pension income in this calculation?

No. The calculator models how long your investment portfolio lasts based on withdrawals. Social Security and pension income are separate. If you receive $20,000 per year from Social Security and need $60,000 total to live, you only need to withdraw $40,000 from your portfolio. Enter $40,000 as your annual withdrawal in the calculator. Guaranteed income reduces how much you need to withdraw from savings.

How often should I recalculate my withdrawal rate?

Recalculate at least once per year, especially after a significant market change or a large withdrawal. If your portfolio drops 20% due to a market crash, your safe withdrawal amount also drops. Similarly, if your portfolio grows, you can increase withdrawals. Many retirees recalculate each January to set the withdrawal amount for the coming year. Flexibility is key to making savings last.

What is a safe withdrawal rate for a 40-year retirement?

For a 40-year retirement (retiring at 60 instead of 65), a safe withdrawal rate is closer to 3% to 3.5% instead of 4%. The longer the time horizon, the lower the safe rate because the portfolio has to survive more years of market volatility and inflation. Use the calculator to test different rates and time horizons. If the calculator shows the balance drops to zero before 40 years, reduce your withdrawal rate.

Retirement Withdrawal Calculator

Enter your portfolio balance, planned annual withdrawal, expected return, and inflation rate to see a year-by-year depletion chart. Include Social Security or pension income to reduce the portfolio draw. A multi-rate comparison table shows what happens if you spend 1% more or less per year. Everything runs in your browser with nothing stored or transmitted.

How does the Retirement Withdrawal Calculator (4% Rule) work step by step?

The [OnSumo Retirement Withdrawal Calculator](/tools/finance/retirement-withdrawal) calculates how long your retirement savings will last based on your starting balance, annual withdrawal amount, expected investment return, and inflation rate. This helps you test whether your savings can sustain you through retirement. You enter your total retirement portfolio value, how much you plan to withdraw each year, the expected annual return on your investments, and the inflation rate. The calculator shows how many years your savings will last and whether your withdrawals are sustainable. The calculation adjusts your withdrawals for inflation each year, applies the investment return to your remaining balance, and tracks the account value over time. If your withdrawals exceed investment growth, the balance declines. If investment growth exceeds withdrawals, the balance grows even as you draw income.

What does a typical Retirement Withdrawal Calculator (4% Rule) result look like?

A retiree has a $1,000,000 portfolio and plans to withdraw $40,000 per year (4% of starting balance), adjusted for inflation. Expected investment return is 6% per year, and inflation is 3% per year. Year 1: Withdraw $40,000. Portfolio grows 6% on remaining $960,000 = $1,017,600 end of year. Year 2: Withdraw $41,200 (4% adjusted for 3% inflation). Portfolio grows 6% on remaining = $1,036,256 end of year. Year 10: Withdraw $52,193. Portfolio balance = $1,228,000. Year 30: Withdraw $96,000. Portfolio balance = $1,700,000. At this withdrawal rate and return, the portfolio grows over time despite annual withdrawals. The retiree can sustain this withdrawal indefinitely or increase it if needed. The 4% rule works here because the 6% return exceeds the 4% withdrawal plus 3% inflation drag.

Frequently asked questions

What is the 4% rule for retirement withdrawals?
The 4% rule suggests withdrawing 4% of your starting retirement balance in year one and adjusting for inflation each year. Historically, this rate has sustained portfolios for 30-year retirements with a balanced stock-bond allocation. A $1,000,000 portfolio following the 4% rule would withdraw $40,000 in year one, $41,200 in year two (if inflation is 3%), and so on. Use the [retirement withdrawal calculator](/tools/finance/retirement-withdrawal) to test the 4% rule with your numbers.
How do I know if my withdrawal rate is sustainable?
A sustainable withdrawal rate is one that does not exhaust your portfolio before the end of your expected lifespan. Use the calculator to project how many years your savings will last at different withdrawal rates and investment returns. If the balance drops to zero before age 90 or 100, reduce withdrawals. If the balance grows over time, your rate is conservative and you can increase withdrawals or leave more to heirs.
What investment return should I assume?
A balanced portfolio of 60% stocks and 40% bonds historically returns 6% to 7% per year before inflation. A conservative portfolio of 80% bonds returns 4% to 5%. An aggressive portfolio of 80% to 100% stocks may return 8% to 10% but with higher volatility. Use the [compound interest calculator](/tools/finance/compound-interest-calculator) to see how different return rates compound over time. For retirement planning, use a conservative estimate to avoid overstating portfolio longevity.
Should I adjust my withdrawals each year for inflation?
Yes. If you withdraw a fixed dollar amount each year without adjusting for inflation, your purchasing power declines. Most retirees increase withdrawals by the inflation rate each year to maintain the same standard of living. If inflation is 3%, a $40,000 withdrawal in year one becomes $41,200 in year two. The calculator accounts for inflation-adjusted withdrawals when you enter an inflation rate.
What happens if the market crashes early in retirement?
A market downturn in the early years of retirement is the biggest risk to portfolio longevity. When you withdraw from a declining portfolio, you sell assets at depressed prices, leaving less principal to recover when markets rebound. This is called sequence-of-returns risk. To mitigate it, hold one to two years of withdrawals in cash or bonds, so you do not sell stocks during a crash. Test downside scenarios in the calculator by using a lower expected return.
Can I withdraw more than 4% if I retire later?
Yes. If you retire at 70 instead of 65, your life expectancy is shorter, so you can withdraw at a higher rate. A 70-year-old might safely withdraw 5% to 6% per year because the portfolio only needs to last 20 to 25 years instead of 30. The calculator shows how different withdrawal rates affect portfolio longevity. Adjust your rate based on your actual life expectancy, not a generic 30-year assumption.
What if my portfolio grows faster than I withdraw?
If investment returns exceed your withdrawal rate plus inflation, your portfolio balance grows even as you withdraw income. This is a good problem to have. You can increase your annual withdrawals, leave more to heirs, or donate the surplus. A person withdrawing 4% from a portfolio returning 7% per year will see the balance grow over time. Use the [retirement withdrawal calculator](/tools/finance/retirement-withdrawal) to model this scenario.
Should I include Social Security or pension income in this calculation?
No. The calculator models how long your investment portfolio lasts based on withdrawals. Social Security and pension income are separate. If you receive $20,000 per year from Social Security and need $60,000 total to live, you only need to withdraw $40,000 from your portfolio. Enter $40,000 as your annual withdrawal in the calculator. Guaranteed income reduces how much you need to withdraw from savings.
How often should I recalculate my withdrawal rate?
Recalculate at least once per year, especially after a significant market change or a large withdrawal. If your portfolio drops 20% due to a market crash, your safe withdrawal amount also drops. Similarly, if your portfolio grows, you can increase withdrawals. Many retirees recalculate each January to set the withdrawal amount for the coming year. Flexibility is key to making savings last.
What is a safe withdrawal rate for a 40-year retirement?
For a 40-year retirement (retiring at 60 instead of 65), a safe withdrawal rate is closer to 3% to 3.5% instead of 4%. The longer the time horizon, the lower the safe rate because the portfolio has to survive more years of market volatility and inflation. Use the calculator to test different rates and time horizons. If the calculator shows the balance drops to zero before 40 years, reduce your withdrawal rate.