4 Percent Rule Calculator

Last updated July 2, 2026

The 4 percent rule is the most widely cited guideline in retirement planning, and understanding both what it says and what it doesn't is essential to using it wisely. The rule emerged from the 1998 Trinity Study, in which three finance professors at Trinity University analyzed historical stock and bond returns from 1926 through 1995. Their finding: a retiree withdrawing 4 percent of their portfolio in year one — then adjusting that dollar amount for inflation each year — had a 95 percent probability of not running out of money over a 30-year retirement with a diversified portfolio of 50 to 75 percent stocks.

In 2026, Morningstar's research places the updated safe withdrawal rate at approximately 3.9 percent for new retirees, reflecting current market valuations and interest rates. The rule also faces a structural limitation for early retirees: it was designed for 30-year retirements, not 40 or 50-year ones. Someone retiring at 55 with a 40-year horizon should apply a more conservative rate of 3.3 to 3.5 percent. The practical implication of the rule is its inverse: to determine the required retirement amount, multiply your annual spending by 25 (the reciprocal of 4 percent). Annual spending of $50,000 implies a target savings of $1.25 million. The 4 percent rule is most useful as a planning benchmark, not as a rigid execution rule — spending flexibility in response to market conditions typically produces better outcomes than mechanical adherence.

The 4 percent rule says you can withdraw roughly $40,000 per year from a $1 million portfolio with a high historical probability of not running out of money over 30 years. For retirements longer than 30 years, a 3.3 to 3.5 percent range is commonly used. And remember: the rule is a starting point, not a contract — building in some flexibility to reduce spending in poor market years significantly improves your odds.