A convention from retirement research in the 1990s, notably William Bengen 1994 study and the Trinity study that followed, which examined historical US market data and discussed withdrawing 4% of a starting balance, adjusted for inflation. It is a research finding about the past, not a rule that promises any particular outcome, and its assumptions are debated.

Why does inflation change the answer so much?

Indexing withdrawals to inflation means the amount you take grows every year while the balance is shrinking, so the two effects compound against each other. At 3% inflation a $40,000 withdrawal is about $54,000 after fifteen years, which pulls the depletion year materially forward.

Can this tell me whether I can retire?

No. It runs one fixed rate of return, which real markets never provide, and the order in which good and bad years arrive changes the outcome substantially even at the same average. Treat it as arithmetic on assumptions you chose, and consider speaking to a licensed financial adviser about your own circumstances.

Retirement Withdrawal Calculator

See how long a balance lasts at a given withdrawal, return and inflation rate. One fixed return is an assumption real markets never provide — this is arithmetic on your inputs, not a projection of your retirement.

Starting balance$Annual withdrawal$4.00% of the starting balance.Annual return%Inflation%Withdrawals rise by this each year. Set 0 to keep them flat.

Balance reaches zero: In year 34
Total withdrawn: $2,269,510
Starting withdrawal rate: 4.00%

Year	Withdrawn	Balance at year end
1	$40,000	$1,008,000
6	$46,371	$1,033,405
11	$53,757	$1,025,518
16	$62,319	$968,721
21	$72,244	$842,060
26	$83,751	$617,602
31	$97,090	$258,325
34	$66,397	$0

Real returns arrive in an order, not as an average, and that order changes the outcome even at the same long-run rate. Before any tax.

How this is calculated

balance(next) = (balance - withdrawal) x (1 + return)
withdrawal(next) = withdrawal x (1 + inflation)

withdrawal: amount taken at the start of each year
return: assumed annual return, applied to what remains after the draw
inflation: annual increase applied to the withdrawal, if indexing is on

Worked example

A $1,000,000 balance with $40,000 withdrawn each year, growing 5% and indexed to 3% inflation, reaches zero in year 34. Without inflation indexing the same inputs never deplete, because the 5% return exceeds the flat 4% draw.

Common questions

What is the 4% rule?: A convention from retirement research in the 1990s, notably William Bengen 1994 study and the Trinity study that followed, which examined historical US market data and discussed withdrawing 4% of a starting balance, adjusted for inflation. It is a research finding about the past, not a rule that promises any particular outcome, and its assumptions are debated.
Why does inflation change the answer so much?: Indexing withdrawals to inflation means the amount you take grows every year while the balance is shrinking, so the two effects compound against each other. At 3% inflation a $40,000 withdrawal is about $54,000 after fifteen years, which pulls the depletion year materially forward.
Can this tell me whether I can retire?: No. It runs one fixed rate of return, which real markets never provide, and the order in which good and bad years arrive changes the outcome substantially even at the same average. Treat it as arithmetic on assumptions you chose, and consider speaking to a licensed financial adviser about your own circumstances.

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This tool performs arithmetic on the figures you enter. It is for informational and educational purposes only, is not investment, tax or financial advice, and is not a recommendation to buy, sell, or hold any security. Projections are assumptions, not forecasts. Always do your own due diligence.

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