4% Rule
A guideline suggesting you can withdraw about 4% of your portfolio in year one of retirement, adjusted for inflation thereafter.
The 4% rule is a rule of thumb for retirement withdrawals. It implies a target portfolio of roughly 25 times your annual expenses. It is a helpful estimate rather than a guarantee, and its assumptions may not fit every situation — especially very long retirements.
Examples
- A portfolio of $1,000,000 would support a first-year withdrawal of about $40,000.