4% Rule Calculator

Use this calculator to apply the 4% rule to estimate retirement income or required portfolio size.

What this calculator does

The 4% rule calculator converts a retirement portfolio into an estimated annual withdrawal. It can also work backward from desired annual income to the portfolio needed.

It uses:

• portfolio value
• desired annual income
• 4% withdrawal rate
• monthly income conversion

4% Rule Formula

Annual Withdrawal = Portfolio × 0.04

Where:

• Portfolio = retirement savings balance
• 0.04 = 4% withdrawal rate
• Required Portfolio = desired income ÷ 0.04
• Monthly Withdrawal = annual withdrawal ÷ 12

Example calculation

If:

• Portfolio = 1,000,000
• Withdrawal rate = 4%
• Annual withdrawal = 1,000,000 × 0.04
• Annual withdrawal = 40,000

Then:

• Monthly withdrawal = 40,000 ÷ 12
• Monthly withdrawal = 3,333
• Required portfolio for 40,000 income = 1,000,000
• The portfolio target is 25 times annual income

The 4% rule withdrawal is 40,000 per year.

What is the 4% rule?

The 4% rule is a retirement planning guideline that starts withdrawals at 4% of the portfolio in the first year. It is often used as a simple estimate for retirement income and portfolio targets.

Why the 4% rule matters

• gives a quick retirement income estimate
• translates spending into a portfolio target
• supports FIRE planning
• creates a simple starting benchmark

When to use this calculator

• estimating income from a portfolio
• working backward from desired income
• checking a FIRE number
• comparing withdrawal assumptions

Common mistakes

• treating 4% as guaranteed
• ignoring taxes and fees
• applying it without considering age
• forgetting spending flexibility matters

4% rule vs safe withdrawal rate

The 4% rule is a fixed shortcut. Safe withdrawal rate is a broader calculation that can change with expected returns, inflation, and retirement length.

Use the 4% rule for a quick estimate and safe withdrawal analysis for deeper planning.

FAQs

What is the 4% rule?

The 4% rule estimates retirement income by withdrawing 4% of a portfolio in the first retirement year.

How do you calculate the 4% rule?

Multiply portfolio value by 0.04, or multiply desired annual income by 25 to find the required portfolio.

What is a good 4% rule target?

A common target is 25 times annual retirement spending.

What is the difference between the 4% rule and safe withdrawal rate?

The 4% rule is a benchmark. Safe withdrawal rate is customized to your assumptions.