Safe Withdrawal Rate Calculator
Your withdrawal rate is your yearly withdrawal divided by your portfolio: $40,000 from $1,000,000 is 4%. The calculator tells you how long the money lasts at your real return, with the withdrawal rising with inflation, and what 3%, 3.5%, 4% and 5% would each pay. Type your own figures.
Your withdrawal rate
4%
Your withdrawal rate
- Money lasts 47 years
- 4% of the portfolio $40,000 a year
- 3.5% of the portfolio $35,000 a year
- 3% of the portfolio $30,000 a year
- At 2% real instead, the money lasts 35 years
| Withdrawal rate | Yearly income | Lasts at 3% real |
|---|---|---|
| 3% | $30,000 | forever |
| 3.5% | $35,000 | 66 years |
| 4% | $40,000 | 47 years |
| 4.5% | $45,000 | 37 years |
| 5% | $50,000 | 31 years |
| 6% | $60,000 | 23 years |
How is the withdrawal rate and the years worked out?
Withdrawal rate = yearly withdrawal ÷ portfolio. Years the money lasts: forever if W ≤ P × r; otherwise ln(W ÷ (W − P × r)) ÷ ln(1 + r), with r the real return.
Worked example. $40,000 ÷ $1,000,000 = 4%. At 3% real the portfolio earns $30,000 in year one, so $40,000 draws it down. ln(40,000 ÷ (40,000 − 30,000)) ÷ ln 1.03 = ln 4 ÷ 0.02956 = 47 years. At $50,000 a year it lasts 31; at $30,000 it never runs out in this model, because the return covers the withdrawal.
Steady-return years versus the historical rules
The years in the results come from a steady return, which is kind to the retiree: it never puts the bad years first. The 4% rule was built the other way, by replaying every actual 30-year sequence since 1926 and asking what rate survived the worst of them. Use the years here to compare rates with each other, and the 4 percent rule guide for what history says about any one of them.
Flexible withdrawals
Most people do not take the same real amount every year regardless. Cutting spending 10% after a bad year, or skipping the inflation rise, extends the money considerably and is why many planners allow a higher starting rate for people who can flex. The calculator models the strict version, which is the one the rules were tested on.
Rate to portfolio
Turned round, the rate gives the portfolio an income needs: $40,000 at 4% is $1,000,000, at 3.5% $1,142,857. The 4 percent rule calculator does that both ways; the FIRE number page shows the multiple of spending each rate implies.
Questions about withdrawal rates
What is a safe withdrawal rate?
The share of a portfolio you can take out in the first year of retirement, then raise with inflation each year, with little chance of running out. The classic answer is 4% for 30 years, from studies of US returns since 1926. Longer retirements and cautious planners use 3% to 3.5%.
How does the calculator work out how long the money lasts?
With a steady real return. If the yearly withdrawal is no more than the portfolio’s real return, the money never runs out in this model. If it is more, the years are ln(W ÷ (W − P × r)) ÷ ln(1 + r): $1,000,000 paying $50,000 a year at 3% real lasts about 31 years.
Why is a steady return a poor assumption in retirement?
Because the order of returns matters once you withdraw. A bad first decade sells assets cheaply and the portfolio never recovers, even if the average return over 30 years was fine. That “sequence risk” is why the historical rules give lower safe rates than a steady-return sum would suggest, and why 4% is treated as a ceiling rather than a target.
What rate should I plan on?
4% for a 30-year retirement starting around 65 is the standard figure. 3.5% for 40 years or for a plan with little flexibility. 3% to 3.25% for 50 years or more, or when valuations are high at the start. If you can cut spending in bad years, a higher starting rate is defensible.
Does it include fees and taxes?
Use a return after fund fees, and a withdrawal that includes the tax due on it. Neither is modelled separately.