Last updated: January 19, 2026
The 4% rule suggests withdrawing 4% of your retirement portfolio in the first year, then adjusting for inflation annually. This aims to make money last 30 years.
This rule is based on historical stock/bond returns. Some argue lower rates are safer given current conditions.
Your required retirement portfolio is 25 times your annual expenses (1 ÷ 0.04 = 25).
Understanding four percent rule helps you make better investment decisions and plan for taxes. Use our fire calculator to see how it applies to your situation.
Most experts agree it's a solid starting point. However, if markets have low future expected returns, a 3.3% or 3.5% rule might be safer for modern retirements.
You withdraw 4% in year one. In year two, you withdraw the same amount plus an adjustment based on the Consumer Price Index (CPI), regardless of market size.
Usually, yes. You withdrawal income from a mix of dividends, interest, and selling shares of stocks/bonds to meet the 4% total for the year.
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