The '4% rule' is a well-known guideline suggesting you can withdraw about 4% of your retirement portfolio in the first year, then adjust for inflation each year, with a good chance the money lasts about 30 years. It's a starting point, not a guarantee. This is educational information, not advice.
The 4% Rule (Safe Withdrawal Rate)
A famous rule of thumb for retirement spending — and its caveats.
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How it works
On a $1,000,000 portfolio, 4% is $40,000 in year one; you'd increase that dollar amount with inflation thereafter. The rule came from historical studies of U.S. stock and bond returns and assumes a diversified portfolio held through ups and downs.
Its limits
The 4% rule is a simplification. Actual safe withdrawal depends on your time horizon, portfolio mix, fees, market conditions at retirement, and flexibility to cut spending in down years. Many planners treat it as a rough anchor and adjust. Talk to a professional for a real plan.
Educational information only — not investment advice, and not a recommendation to buy any security. Expense ratios are approximate and can change; verify with the fund issuer. We are not a licensed financial advisor.
Frequently asked questions
Is the 4% rule guaranteed?
No — it's a historical rule of thumb, not a guarantee. Outcomes vary with markets, fees, and how long you need the money to last.
How big a portfolio do I need?
A rough inverse of the rule: to withdraw $40,000/year at 4%, you'd need about $1,000,000. This is educational information, not personalized advice.
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