4% Rule Calculator
How long will your retirement savings last? Calculate years until depletion, find your maximum safe withdrawal, or stress-test against a market crash. Works with any currency.
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How to Use This Calculator
Tab "How Long Will It Last"
Enter your retirement nest egg, annual withdrawal, expected return, and inflation rate. The calculator simulates year-by-year balances, adjusting your withdrawal for inflation each year, and shows how many years until your money runs out. A bar chart visualises the portfolio declining over time.
Tab "Safe Withdrawal"
Enter your nest egg and how many years your savings must last. The calculator solves for the maximum annual withdrawal (and monthly equivalent) that depletes your portfolio at exactly the target year. Use this to answer: "How much can I safely spend each year?"
Tab "Stress Test"
Same inputs as Tab 1, but you also specify a bad-year return and number of bad years at the start of retirement. This models sequence-of-returns risk — a market crash right after you retire. The result shows how many fewer years your savings last compared to a normal scenario.
The Formulas
W(n) = W(0) × (1 + inflation)^n
Balance after year n:
B(n) = B(n−1) × (1 + return) − W(n)
Years until depletion:
Find the first n where B(n) ≤ 0
Safe withdrawal rate:
Solve for W(0) such that B(target years) = 0
The 4% rule:
W(0) = 4% × nest egg (e.g. $40,000 from $1,000,000)
All calculations use constant annual return and inflation assumptions. Real markets are volatile — the Stress Test tab helps model that uncertainty. No taxes are applied.
Worked Examples
Example 1 — Classic 4% Rule: $1M, $40K/yr, 7% return, 3% inflation
A retiree has $1,000,000 saved and withdraws $40,000 in year one (a 4% withdrawal rate). The portfolio earns 7% nominal returns and withdrawals grow by 3% inflation each year.
At the classic 4% rate, the portfolio lasts well beyond the 30-year benchmark — consistent with Bengen's original finding.
Example 2 — Aggressive 5%: $1M, $50K/yr, 7% return, 3% inflation
Same portfolio but withdrawing $50,000 per year (5% rate) instead of $40,000.
Increasing the withdrawal rate from 4% to 5% shortens the portfolio life by about 10 years — a significant reduction. This illustrates why even a small increase in withdrawal rate has a large impact.
Example 3 — Stress Test: $1M, 4%, crash then recovery
Same $1M portfolio with 4% withdrawal, but a market crash of −15% per year for the first 3 years, followed by 8% returns for the rest.
The bad-sequence start costs roughly 8 years of retirement compared to the normal scenario. This is sequence-of-returns risk in action — the same average return over your lifetime, but poor returns early destroy the portfolio faster.
Understanding the 4% Rule
Origin: Bengen (1994)
Financial planner William Bengen analysed every 30-year retirement period from 1926 to 1992 using actual US stock and bond returns. He found that a 4% initial withdrawal rate, adjusted for inflation each year, survived even the worst historical period (a retiree starting in 1966). The research was published in the Journal of Financial Planning and became one of the most widely cited rules of thumb in retirement planning.
Sequence-of-Returns Risk
Sequence risk is the most important concept the 4% rule tries to address. If you experience a bear market early in retirement, you sell assets at low prices to fund withdrawals, permanently reducing the portfolio's ability to recover. Two retirees with the same average return over 30 years can have vastly different outcomes depending on whether the bad returns came early or late. The Stress Test tab models this directly.
Conservative Rates for Long Retirements
Bengen's work assumed a 30-year retirement. If you plan to retire early (FIRE) or expect a 40+ year retirement, many advisers recommend a lower rate — 3.5% or even 3.25%. This calculator helps you find the exact rate for your situation using the Safe Withdrawal tab.
Limitations
The 4% rule assumes: (1) a portfolio of 50-75% US stocks and 25-50% bonds, (2) historical US market returns (which may not repeat), (3) no taxes on withdrawals, (4) constant spending adjusted only for inflation. In reality, retirees spend more in early retirement, less in the middle, and more again for healthcare in late retirement. Use this calculator as a starting point, not the final word.