4% Rule Calculator

The 4% rule is a popular retirement guideline suggesting you can safely withdraw 4% of your investment portfolio each year in retirement, aiming for your money to last at least 30 years. It's based on historical market performance and is a useful starting point for planning. Learn more about the 4% rule in our comprehensive guide.

• How it works: Multiply your desired annual retirement income by 25 to estimate your target nest egg.
• Assumptions: The rule assumes a balanced portfolio, steady withdrawals, and average market returns. It’s not a guarantee, but a guideline.

How Can You Reach Your Goal?

• Increase Your Expected Return: Aiming for a higher interest rate (e.g., investing more in stocks) can reduce the amount you need to save each month, but comes with higher risk and more volatility. Make sure your risk tolerance matches your plan.
• Retire Later: Delaying retirement gives your investments more time to grow, reducing the monthly savings needed. Even a few extra years can make a big difference.
• Save More Now: Increasing your monthly contributions, even by a small amount, can have a big impact over time due to compounding.
• Adjust Your Target: If the 4% rule doesn’t fit your circumstances (e.g., you want a more conservative plan, or expect lower returns), consider using a lower withdrawal rate (like 3.5%) or adjusting your target income.

Remember: The 4% rule is a starting point, not a one-size-fits-all answer. Your actual safe withdrawal rate may be higher or lower depending on market conditions, your risk tolerance, and your spending needs. Consider consulting a financial advisor for a plan tailored to your situation.