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4% Rule Retirement Calculator

Simulate the Trinity Study / Bengen withdrawal protocol: fixed initial withdrawal rate adjusted for inflation each year. See whether your portfolio survives the planning horizon.

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The 4% rule with inflation adjustment is the canonical safe-withdrawal protocol from the Trinity Study (Cooley, Hubbard, Walz 1998) and Bengen (1994). You withdraw a fixed initial percentage in year one, then increase the *dollar* amount by inflation each subsequent year — keeping your real (purchasing-power) spending flat. This calculator simulates the protocol year by year so you can see whether a given portfolio, withdrawal rate, return, and inflation assumption survives your planning horizon.

Enter your starting portfolio, the initial withdrawal rate (4% is the Trinity Study default), expected nominal return on the portfolio, expected inflation, and the planning horizon in years. The result shows whether the portfolio survives, the year-by-year balances, your year-1 and year-N withdrawals (and the year-N withdrawal in real terms), and the ending balance in both nominal and today-dollar terms. Run alternate scenarios by adjusting the rate or horizon — early retirees with 40+ year horizons typically need 3.25-3.5% to maintain the same survival probability.

Examples

$1M, 4% initial, 7% return, 3% inflation, 30 years

Year-1 withdrawal $40,000. Year-30 withdrawal ~$94,000 nominal (still ~$40k in today's dollars). Ending balance nominal ~$2.4M, real ~$1M — the portfolio more than survives, ending with roughly its starting purchasing power intact. The classic Trinity Study result.

Same inputs, 5% initial withdrawal

Year-1 $50,000. Year-30 ~$117k nominal. Portfolio survives but ends much smaller in real terms (~$300k). 5% leaves much less margin for sequence-of-returns risk.

$1M, 4%, 5% return, 3% inflation, 40 years

Lower return + longer horizon = harder. Portfolio exhausted around year 30-32. This is why early retirees with 40+ year plans typically use 3.25-3.5% rather than 4%.

Frequently Asked Questions

Why does the withdrawal grow with inflation?
The 4% rule's purpose is to preserve real purchasing power, not the nominal dollar amount. If your year-1 withdrawal of $40,000 stayed flat for 30 years at 3% inflation, by year 30 it would buy what $16,500 buys today. Inflating the withdrawal each year keeps your real spending constant.
What is sequence-of-returns risk?
The risk that bad returns happen early in retirement, when the portfolio is largest and withdrawals are biting hardest. A 30-year sequence with the same average return survives at very different rates depending on whether the bad years come first or last. The Trinity Study found 4% has roughly a 95% survival rate across historical 30-year windows; the 5% who fail are dominated by retirees who started in 1929, 1965-1969, or 2000.
Should I use real or nominal returns here?
This calculator uses *nominal* return (matching the original Trinity Study presentation). Inflation is a separate input, and the inflation-adjusted ending balance is shown separately. If you have only a real return number, set inflation to 0% and use the real return as "expected return" — but the year-N withdrawal will then no longer grow.
Is 4% safe for early retirement?
Less safe than for a 30-year window. The Trinity Study used 30-year retirements; for 40-year horizons (early retirement at 50, expecting to live to 90+), the safe rate drops to roughly 3.25-3.5% to maintain a similar survival probability. Use this calculator with a longer horizon to see the difference.
What about taxes?
Not modelled directly — build them into your "annual withdrawal" by inflating the rate. If you need $40,000 to live on after taxes and you pay 15% effective on withdrawals, withdraw $47,059 / year, which on a $1M portfolio is a 4.7% rate.
Does the 4% rule include Social Security?
No — it assumes the portfolio is the sole income source. If you expect Social Security, a pension, rental income, or part-time work, reduce your "annual withdrawal" need by those inflows; the portfolio only has to fund the gap.

References

  1. Bengen, W. P. (1994). "Determining Withdrawal Rates Using Historical Data." — Journal of Financial Planning
  2. Cooley, P. L., Hubbard, C. M., Walz, D. T. (1998). "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable." — AAII Journal — the "Trinity Study"
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Did you know?
Calculators are estimates. Consult professionals for critical decisions.

The 4% rule with inflation adjustment is the canonical safe-withdrawal protocol from the Trinity Study (Cooley, Hubbard, Walz 1998) and Bengen (1994). You withdraw a fixed initial percentage in year one, then increase the *dollar* amount by inflation each subsequent year — keeping your real (purchasing-power) spending flat. This calculator simulates the protocol year by year so you can see whether a given portfolio, withdrawal rate, return, and inflation assumption survives your planning horizon.

How to Use This Calculator

Enter your starting portfolio, the initial withdrawal rate (4% is the Trinity Study default), expected nominal return on the portfolio, expected inflation, and the planning horizon in years. The result shows whether the portfolio survives, the year-by-year balances, your year-1 and year-N withdrawals (and the year-N withdrawal in real terms), and the ending balance in both nominal and today-dollar terms. Run alternate scenarios by adjusting the rate or horizon — early retirees with 40+ year horizons typically need 3.25-3.5% to maintain the same survival probability.

Understanding the Formula

Year-N withdrawal = (Initial portfolio × initial WR) × (1 + inflation)^(N-1). Year-N ending balance = (Start balance − withdrawal) × (1 + nominal return). Real-dollar end balance = nominal end balance / (1 + inflation)^N.

Examples

$1M, 4% initial, 7% return, 3% inflation, 30 years

Year-1 withdrawal $40,000. Year-30 withdrawal ~$94,000 nominal (still ~$40k in today's dollars). Ending balance nominal ~$2.4M, real ~$1M — the portfolio more than survives, ending with roughly its starting purchasing power intact. The classic Trinity Study result.

Same inputs, 5% initial withdrawal

Year-1 $50,000. Year-30 ~$117k nominal. Portfolio survives but ends much smaller in real terms (~$300k). 5% leaves much less margin for sequence-of-returns risk.

$1M, 4%, 5% return, 3% inflation, 40 years

Lower return + longer horizon = harder. Portfolio exhausted around year 30-32. This is why early retirees with 40+ year plans typically use 3.25-3.5% rather than 4%.

Frequently Asked Questions

Why does the withdrawal grow with inflation?

The 4% rule's purpose is to preserve real purchasing power, not the nominal dollar amount. If your year-1 withdrawal of $40,000 stayed flat for 30 years at 3% inflation, by year 30 it would buy what $16,500 buys today. Inflating the withdrawal each year keeps your real spending constant.

What is sequence-of-returns risk?

The risk that bad returns happen early in retirement, when the portfolio is largest and withdrawals are biting hardest. A 30-year sequence with the same average return survives at very different rates depending on whether the bad years come first or last. The Trinity Study found 4% has roughly a 95% survival rate across historical 30-year windows; the 5% who fail are dominated by retirees who started in 1929, 1965-1969, or 2000.

Should I use real or nominal returns here?

This calculator uses *nominal* return (matching the original Trinity Study presentation). Inflation is a separate input, and the inflation-adjusted ending balance is shown separately. If you have only a real return number, set inflation to 0% and use the real return as "expected return" — but the year-N withdrawal will then no longer grow.

Is 4% safe for early retirement?

Less safe than for a 30-year window. The Trinity Study used 30-year retirements; for 40-year horizons (early retirement at 50, expecting to live to 90+), the safe rate drops to roughly 3.25-3.5% to maintain a similar survival probability. Use this calculator with a longer horizon to see the difference.

What about taxes?

Not modelled directly — build them into your "annual withdrawal" by inflating the rate. If you need $40,000 to live on after taxes and you pay 15% effective on withdrawals, withdraw $47,059 / year, which on a $1M portfolio is a 4.7% rate.

Does the 4% rule include Social Security?

No — it assumes the portfolio is the sole income source. If you expect Social Security, a pension, rental income, or part-time work, reduce your "annual withdrawal" need by those inflows; the portfolio only has to fund the gap.

Assumptions & Limitations

  • Returns are constant year over year. The Trinity Study used historical sequences and found 4% survives most 30-year windows; this calculator uses a single-rate average and is therefore an upper-bound estimate of survival probability.
  • Inflation is constant. The 1970s sequence (high inflation + flat returns) is the worst case for the 4% rule; if you want to stress-test, set the inflation rate equal to or above the expected return for a few years mentally.
  • Portfolio is rebalanced annually with no costs. Real portfolios incur fees, taxes, and trading friction.
  • Withdrawals happen at the start of each year before market growth. Some implementations withdraw quarterly or monthly; the difference is small (under 1% of final balance over 30 years).
  • No flexibility. The classic protocol mechanically increases withdrawal by inflation regardless of market conditions; flexible withdrawal strategies (Guyton-Klinger, dynamic spending) materially improve survival probability.
  • No taxes on withdrawals. Build the tax bill into your assumed annual withdrawal.

References

  1. Bengen, W. P. (1994). "Determining Withdrawal Rates Using Historical Data." — Journal of Financial Planning
  2. Cooley, P. L., Hubbard, C. M., Walz, D. T. (1998). "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable." — AAII Journal — the "Trinity Study"