Safe Withdrawal Rate Calculator
Calculate how much you can safely withdraw from your portfolio each year without running out of money. Based on the 4% rule and adjustable parameters.
Inputs
Total retirement portfolio value
Percentage to withdraw annually (4% is traditional rule)
Expected annual portfolio return
Expected annual inflation rate
Simulation time horizon
How to Use These Results
- Stress-test different withdrawal rates: Start with the traditional 4% rule, then try 3% for more conservative planning or 5% if you have a shorter retirement timeline. The calculator shows when your portfolio might deplete.
- Adjust for market conditions: Lower expected returns or higher inflation will reduce how long your portfolio lasts. Use this to plan for different economic scenarios.
- Consider sequence of returns risk: The calculator assumes consistent returns, but real markets fluctuate. Consider keeping 1-2 years of expenses in cash to avoid selling during market downturns.
Frequently Asked Questions
What is the 4% rule?
The 4% rule suggests withdrawing 4% of your initial portfolio value in the first year of retirement, then adjusting annually for inflation. This rule is based on historical market data suggesting it would sustain a 30-year retirement in most scenarios.
Is the 4% rule still valid today?
The 4% rule is a guideline, not a guarantee. Current market conditions, low interest rates, and longer life expectancies may require adjustments. Many experts now suggest 3-3.5% for longer retirements or more conservative portfolios.
How does inflation affect withdrawals?
Inflation reduces purchasing power over time. If you withdraw the same dollar amount each year, your real purchasing power decreases. This calculator adjusts withdrawals annually for inflation, showing how your portfolio balance changes.
What if my portfolio runs out?
If the calculator shows your portfolio depleting before your target date, consider: reducing your withdrawal rate, increasing expected returns (higher risk allocation), extending retirement timeline, or reducing spending.