The 4% rule
The 4% rule is the starting point for FIRE math — a rule of thumb for how much you can safely withdraw each year.
The 4% rule is the starting point for FIRE math — a rule of thumb for how much you can safely withdraw each year.
The 4% rule says you can withdraw 4% of your starting portfolio in year one, then adjust that dollar amount for inflation each year, and the money historically lasted 30 or more years in most scenarios. It's why a FIRE number is often quoted as 25× annual expenses — 25 is 1 divided by 4%.
The rule traces to the 1990s Trinity study and William Bengen's research, which tested historical U.S. market returns across many retirement start dates. It's a well-tested benchmark — not a law. Long retirements, poor early returns (sequence-of-returns risk), and high fees can all argue for a lower rate.
A lower withdrawal rate (say 3.5%) is more conservative and raises your FIRE number; a higher one lowers it but adds risk. The calculator lets you set any rate and see the effect on both your number and your timeline immediately.
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It remains a widely used starting point. Some researchers suggest 3.5% for very long (40+ year) retirements or cautious assumptions, while flexible spending can support slightly higher rates. Treat it as a benchmark, not a guarantee.
Because 25 is 1 divided by 4%. Withdrawing 4% of a portfolio equal to 25× your expenses covers one year of spending.
The risk that poor market returns early in retirement, combined with withdrawals, permanently shrink the portfolio. It's the main reason the safe rate is below the long-run average return.
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