Safe Withdrawal Rate Calculator — Test the 4% Rule For Your Retirement
Run 1,000 Monte Carlo retirement simulations in your browser. Change the withdrawal rate, length, and stock allocation to see how often your plan survives.
Quick answer: The 4% rule, from Bengen (1994) and the Trinity Study, suggests retirees can withdraw 4% of their initial portfolio adjusted for inflation annually with roughly 95% historical success over 30 years. A $1M portfolio supports $40,000/year in real dollars. For a 50-year early-retirement horizon the safer figure drops to roughly 3.25-3.5%. Test your own assumptions below.
Your retirement assumptions
Invested assets (taxable + tax-advantaged). Exclude primary residence equity.
Annual withdrawal at start: $40,000 (real dollars, inflation-adjusted yearly).
Assumes annual rebalancing. Stocks: 7% real / 18% std dev. Bonds: 2% real / 7% std dev.
Monte Carlo result
How this simulation works
This is a Monte Carlo simulation, NOT a historical backtest. Each of 1,000 runs draws annual real returns from normal distributions (stocks ~ N(7%, 18%), bonds ~ N(2%, 7%)), rebalances annually, and withdraws a fixed real amount at the start of each year. A run "fails" if the portfolio hits zero before the retirement length ends. Because returns are resampled when the seed changes, results vary slightly on rerun. Normal-distribution returns underweight tail risk vs actual history; real markets have fatter negative tails (2008, 1929). Treat these numbers as optimistic.
Where the 4% rule comes from
William Bengen, a California financial planner, published "Determining Withdrawal Rates Using Historical Data" in the Journal of Financial Planning in October 1994. He tested every rolling 30-year period of US market returns from 1926 forward, assuming a 50/50 stock/bond portfolio with annual rebalancing. The highest withdrawal rate that never failed — including retirees starting in 1929, 1937, 1968, and 1973 — was about 4%. Bengen called this the "SAFEMAX" rate.
The Trinity Study, published in 1998 by three finance professors at Trinity University, extended the analysis across portfolio compositions (25/75, 50/50, 75/25, 100/0) and retirement lengths (15, 20, 25, 30 years). Their headline finding: 4% withdrawal with annual inflation adjustment succeeded ~95% of the time over 30 years for stock-heavy portfolios.That single number — 4% — became the FIRE community's default target, and the $25,000×-annual-expenses "FIRE number" you see everywhere is just 1 ÷ 4%.
Both studies used historical sequence replay, not Monte Carlo. The calculator above does Monte Carlo for flexibility — you can simulate longer retirements (40, 50 years) than history has enough rolling periods for. Compare to Bengen's original: historical 4%-for-30yr success = 100% in his data; Monte Carlo with our parameters lands around 91% because the normal distribution produces slightly wider return tails than history.
Why 4% might be too high
Three conditions that push the safe rate below 4%: longer retirement horizons (early FIRE at 35 means 50+ years — the 30-year math breaks), sequence-of-returns risk in the first decade (a 30% drop in years 1-3 is far more damaging than the same drop in years 25-27), and lower expected real returns (some researchers argue future 60/40 real returns will be 4-5% not 7% due to current valuations, which mechanically lowers the safe rate by 0.5-1%).
Why 4% might be too low
Bengen and Trinity assumed rigid inflation-adjusted withdrawals — no flexibility in response to market conditions. Real retirees flex. If you can temporarily cut discretionary spending by 10-15% during a severe downturn (skipping a vacation, deferring a car replacement), your safe starting rate can rise to 4.5-5%. Guyton-Klinger guardrails formalize this: raise spending 10% if the portfolio grows past a ceiling, cut 10% if it drops below a floor. Academic work by Pfau and Kitces suggests flexible strategies support 5-6% average withdrawals with similar failure risk to rigid 4%.
Reference table: 60/40 portfolio success rates
| Retirement length | Withdrawal rate | Success rate |
|---|---|---|
| 20 years | 3.0% | 99.8% |
| 20 years | 4.0% | 98.2% |
| 20 years | 5.0% | 92.4% |
| 20 years | 6.0% | 80.1% |
| 30 years | 3.0% | 98.4% |
| 30 years | 3.5% | 95.9% |
| 30 years | 4.0% | 91.2% |
| 30 years | 5.0% | 76.3% |
| 30 years | 6.0% | 58.5% |
| 40 years | 3.0% | 94.7% |
| 40 years | 3.5% | 88.3% |
| 40 years | 4.0% | 79.6% |
| 40 years | 5.0% | 60.2% |
| 50 years | 3.0% | 89.1% |
| 50 years | 3.5% | 80.4% |
| 50 years | 4.0% | 69.7% |
Simulated with 10,000 Monte Carlo runs per row. 60% stocks / 40% bonds, annual rebalancing, real returns. Bolded row is the classic "4% rule" configuration.
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Frequently asked questions
What is a safe withdrawal rate?
The safe withdrawal rate (SWR) is the percentage of your initial retirement portfolio you can withdraw in year one — adjusted for inflation each subsequent year — with a high probability of not running out over a target retirement length. The classic figure is 4% for a 30-year retirement, from Bengen (1994) and the Trinity Study (1998).
Why is it called the 4% rule?
William Bengen's 1994 paper tested every rolling 30-year period of US stock and bond returns from 1926 and found that withdrawing 4% of the initial portfolio — then adjusting that dollar amount for inflation annually — never failed over 30 years for a 50/50 stock/bond mix. The Trinity Study (Cooley, Hubbard, Walz, 1998) extended this across multiple portfolio compositions and found similar ~95%+ success rates for 4%.
Why might 4% be too high for early retirees?
The 4% rule assumes a 30-year retirement. Someone retiring at 40 may need 50+ years of sustainability, and at that horizon 4% historical success drops to roughly 70-80%. Many FIRE practitioners target 3.25-3.5% SWR for 50-year plans, or use a dynamic withdrawal strategy (reduce spending in bad years).
Why might 4% be too low?
Rigid 4%-with-inflation-adjustment ignores flexibility. A retiree who can cut discretionary spending by 10-15% during bad market years has much higher safe-rate tolerance. Guyton-Klinger guardrails, variable percentage withdrawal (VPW), and the Yale endowment rule all allow higher average withdrawals by letting spending fluctuate.
How is this Monte Carlo different from a historical backtest?
A historical backtest replays actual US market sequences from 1926 onward. Monte Carlo samples new return sequences from assumed distributions (we use stocks ~ N(7%, 18%) real, bonds ~ N(2%, 7%) real). Monte Carlo generates more scenarios than history provides (1,000+ sequences vs ~60 rolling 30-year periods) but underweights fat-tail events — real crashes in 1929, 1973, 2008 were worse than a normal distribution predicts. Treat Monte Carlo success rates as slightly optimistic.
What stock allocation is best?
For 30-year retirements, 50-75% stocks has historically produced the highest success rate. Below 40% stocks, inflation erodes fixed-income returns too fast over long horizons. Above 80% stocks, sequence-of-returns risk spikes in the first 5-10 years. The Trinity Study's sweet spot was 50/50 to 75/25.