The 4% Rule: How Safe Withdrawal Rates Actually Work

The "4% rule" traces back to research from the 1990s (notably the Trinity Study) that tested historical U.S. market returns to see what withdrawal rate a retirement portfolio could sustain over a 30-year retirement without running out of money.

A 4% initial withdrawal rate held up in the large majority of historical 30-year periods studied. In dollar terms, this is the same as saying your FIRE number is about 25 times your annual expenses (since 1 ÷ 0.04 = 25).

The rule has well-known limitations: it assumes a specific stock/bond allocation, a 30-year horizon (which may be too short for someone retiring at 40 rather than 65), and doesn't account for taxes, fees, or major one-off expenses.

Because of these limitations, many in the FIRE community use a more conservative withdrawal rate (3% to 3.5%) for early retirement. This calculator lets you adjust the withdrawal rate slider so you can see how a more conservative assumption changes your FIRE number and target age.