4% Rule Calculator
Turn a Retirement Portfolio into a First-Year Withdrawal β Then Test the Assumptions
Use the traditional 4% rule as a starting framework, compare alternative withdrawal rates, include inflation and investment returns, and see why a withdrawal rule is not the same as a guarantee that money will last.
Portfolio and withdrawal rate
Inflation, investment return & retirement horizon
Advanced assumption β annual investment fee
Portfolio balance under different withdrawal rates
Compare a lower rate, your selected rate and a higher rate using the same return, inflation and fee assumptions.
First-year income by withdrawal rate
3% to 6% withdrawal-rate comparison
| Starting rate | First-year annual withdrawal | First-year monthly | Projected balance at horizon | Modeled depletion |
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2026 Research Context β Why 4% Is a Starting Point, Not a Universal Answer
The original 4% framework is commonly associated with taking 4% of the initial retirement portfolio in year one and increasing the dollar withdrawal with inflation thereafter. It is a historical rule of thumb, not a promise that every 4% plan will work.
Morningstarβs 2026 retirement-income material reports a 3.9% base-case starting withdrawal rate under a specific framework: a 30-year horizon, 90% probability of funds remaining, fixed inflation-adjusted spending, and forward-looking return assumptions. The same research emphasizes that flexible spending methods can support different starting withdrawals because spending is allowed to change with market conditions.
This calculator therefore lets you change the rate, horizon, inflation and return instead of presenting 4% as universally βsafe.β For a more detailed strategy comparison, see the Retirement Withdrawal Strategies guide.
Worked Examples β Try Different Withdrawal Rates
Understanding the 4% Rule
The rule is about the starting withdrawal, not withdrawing 4% of the current portfolio every year. Under the classic fixed-real approach, a retiree starts with 4% of the initial portfolio in year one, then adjusts that dollar amount for inflation in later years.
A constant-percentage strategy is different: it recalculates the withdrawal as a percentage of the current portfolio each year, causing spending to rise and fall with market values. That difference matters when comparing retirement-withdrawal strategies.
Assumptions & Limitations
- This is a deterministic constant-return projection, not a Monte Carlo probability model.
- When inflation adjustment is enabled, the first-year dollar withdrawal increases once every 12 months.
- The fee input reduces the modeled annual return.
- The projection does not model taxes, Social Security, pensions, RMDs, changing spending, sequence-of-returns volatility or asset-allocation changes.
- A portfolio surviving this deterministic projection does not prove that the rate is βsafeβ in real markets.
Questions People Ask About the 4% Rule and Safe Withdrawal Rates
Each question opens into a detailed explanation while the question headings remain visible for users and search engines.
What is the 4% rule for retirement?
The 4% rule is a retirement-spending guideline that begins with a first-year withdrawal equal to 4% of the initial portfolio. Under the traditional fixed-real interpretation, the retiree then increases the dollar amount of the withdrawal with inflation rather than recalculating 4% of the portfolio every year.
For a $1,000,000 starting portfolio, 4% equals $40,000 in the first year, or roughly $3,333 per month before taxes. If inflation is 2.5%, the next yearβs dollar withdrawal would be approximately $41,000 under the classic inflation-adjusted method.
Is 4% still a safe withdrawal rate in 2026?
No withdrawal rate can be labeled universally safe for every retiree. Time horizon, asset allocation, future returns, inflation, fees, taxes and willingness to reduce spending all matter. Current Morningstar research uses 3.9% as a base-case starting rate under its specified 30-year, 90%-success, fixed-real-spending assumptions, while also finding that flexible spending strategies can support different initial rates.
Use 4% as a comparison point, not a guarantee. Test lower and higher rates here, then use the money-last calculator for a fuller cash-flow model.
How much can I withdraw from $500,000 using the 4% rule?
Four percent of $500,000 is $20,000 in the first year, or about $1,667 per month before taxes. That arithmetic is simple; the harder question is whether that spending path fits your horizon and investment assumptions. Inflation adjustments increase later-dollar withdrawals, and poor returns early in retirement can create additional risk.
How much can I withdraw from $1 million using the 4% rule?
Four percent of $1 million is $40,000 in the first year, or about $3,333 per month before taxes. The classic rule then increases the dollar amount with inflation rather than taking exactly $40,000 forever.
How large a portfolio do I need for $5,000 per month using the 4% rule?
$5,000 per month equals $60,000 per year. Dividing $60,000 by 4% gives $1.5 million as the portfolio implied by a 4% first-year withdrawal. That is only a rule-of-thumb conversion; it does not account for Social Security, taxes, changing spending or market sequence risk.
What is a safe withdrawal rate?
A safe withdrawal rate is an analytical concept: a starting portfolio withdrawal rate intended to meet a specified retirement horizon and success criterion under a set of assumptions. Different studies use different market data, forecasts, asset allocations and spending rules, so the result is not a universal constant.
What is the difference between the 4% rule and a retirement drawdown calculator?
The 4% rule converts a portfolio into a starting withdrawal using a rule of thumb. A drawdown or money-last calculator models the balance through time using spending, investment returns, inflation and potentially other income. If you want to know when an actual portfolio could run out under your assumptions, use the How Long Will My Money Last Calculator.
Sources & Further Reading
Calculation Methodology
First-year annual withdrawal = starting portfolio Γ starting withdrawal rate
Portfolio implied by spending = first-year annual spending Γ· starting withdrawal rate
For the projection, the calculator converts the net annual return after fees into a monthly rate, applies monthly investment growth, subtracts one-twelfth of the current yearβs modeled withdrawal, and increases the annual withdrawal each year when inflation adjustment is enabled.