Retirement Withdrawal Calculator

The 4% Rule

The traditional 4% rule suggests withdrawing 4% of your portfolio in the first year, then adjusting for inflation each year. Historical analysis shows this has a high success rate over 30-year periods.

Withdrawal Strategies Explained

• Constant Dollar: Withdraw a fixed amount (adjusted for inflation). Simple and predictable, but doesnt respond to market conditions.
• Constant Percentage: Withdraw a fixed percentage of current portfolio. Automatically adjusts for market performance, but income varies.
• Guardrails: Set upper and lower bounds. Increase spending in good years, decrease in bad years. Balances stability and flexibility.

Factors Affecting Safe Withdrawal Rate

• Time horizon: Longer retirement = lower safe rate
• Asset allocation: More stocks = higher potential rate but more volatility
• Spending flexibility: Ability to reduce spending = higher safe rate
• Other income: Social Security, pension reduce portfolio dependence
• Sequence of returns: Early losses hurt more than later ones

Modern Guidance

Recent research suggests that the safe withdrawal rate may be lower than 4% in todays environment of potentially lower returns. Many advisors now suggest 3-3.5% for those with longer retirement horizons or who want more certainty.

Tips for Success

• Keep 1-2 years of expenses in cash to avoid selling in downturns
• Consider flexible spending in early retirement years
• Review and adjust your strategy annually
• Factor in healthcare costs and potential long-term care
• Consider delaying Social Security for higher guaranteed income