4% Rule Calculator
Calculate the nest egg you need using the 4% safe withdrawal rule — annual spending divided by 4% (25× spending). Adjustable rate. Runs in your browser.
Nest egg required
- Required nest egg (4%)
- $1,250,000
- As a multiple of spending
- 25.0×
- First-year withdrawal
- $50,000 ($4,167/mo)
The 4% rule (Trinity study; Bengen, 1994): a portfolio = annual spending ÷ 4% = 25× spending historically sustained 30 years of inflation-adjusted withdrawals from a stock/bond mix. Lower rates (3–3.5%) give more safety for early retirees or long horizons; it is a guideline, not a guarantee, and ignores taxes and sequence-of-returns risk. Informational, not financial advice.
About this tool
The 4% rule is the most-cited rule of thumb in retirement planning, and this calculator applies it directly: divide the annual spending you want your portfolio to cover by 4% and you get the nest egg required — equivalently, 25 times your annual spending. The rule comes from William Bengen's 1994 research and the subsequent 'Trinity study,' which examined historical US market data and found that retirees who withdrew 4% of a balanced stock/bond portfolio in their first year and then adjusted that amount for inflation each year rarely ran out of money over a 30-year retirement. The tool lets you choose a more conservative withdrawal rate — 3% or 3.5%, which raise the multiple to 33× and ~29× — appropriate for early retirees, longer horizons, or lower expected returns. It is a planning baseline, not a guarantee: it is based on historical data, ignores taxes, and does not account for sequence-of-returns risk (a bad early market can still threaten a 4% plan). It is informational, not financial advice. Everything runs in your browser.
How to use it
- Enter the annual spending your portfolio must cover.
- Choose a withdrawal rate — 4% is the classic, 3–3.5% is safer.
- Read the required nest egg and its multiple of spending.
- Subtract Social Security/pension from spending first for a smaller target.
Frequently asked questions
- Where does the 4% rule come from?
- William Bengen's 1994 study and the Trinity study (1998) analyzed historical US market returns and found a 4% inflation-adjusted withdrawal from a stock/bond portfolio survived 30 years in nearly all historical periods. It became the standard safe-withdrawal benchmark.
- Why does 4% mean 25× spending?
- Because 4% is 1/25. If you withdraw 4% of the portfolio and that must equal your spending, the portfolio is spending ÷ 0.04 = 25 × spending. A 3% rate needs about 33×; a 5% rate, 20×.
- Is the 4% rule still valid?
- It remains a reasonable baseline for ~30-year retirements, but it is debated. Some argue for 3–3.5% given today's valuations, longer lifespans, or early retirement; others note flexibility (cutting spending in down years) can support higher rates. Treat it as a starting point.
- Does it account for taxes?
- No. Withdrawals from tax-deferred accounts are taxable, so your gross need may exceed your spending. Factor in your tax situation, or hold a mix of account types, when planning the actual nest egg.
- What is sequence-of-returns risk?
- The danger that poor market returns early in retirement, combined with withdrawals, permanently shrink the portfolio even if average returns are fine. It is the main reason some retirees use a lower rate or reduce withdrawals after bad years.
- Is this financial advice?
- No. It is an informational application of a historical rule of thumb. Consult a financial advisor for a personalized retirement plan.