How this number is made
The 4% rule takes 4% of the starting portfolio in year one and then adjusts that dollar amount for inflation. This page only does year one, at the percent you type. It does not simulate later markets.
- The portfolio is what you would actually withdraw from, not the house you live in.
- Change the percent if you want a different first year. Later inflation raises are not computed.
Formula
Year-one withdrawal = portfolio × percent. Monthly = that ÷ 12.
Worked example
With the figures already in the form, per month in year one is $2,666.67.
Questions
Does the withdrawal rise with inflation?
In the original rule, yes, starting in year two. This page is year one only.
Is 4% conservative for a long retirement?
For retirements much longer than 30 years, many researchers use a smaller first-year percent. The percent is yours to type.