What is the 4 percent rule?
Understand where the 4% rule comes from and how to use it responsibly.
The 4% rule is one of the most recognizable retirement planning shortcuts because it turns spending into a portfolio target quickly.
Use this guide to understand the tradeoffs quickly, then open one of the related models below if you want to turn the idea into a planning scenario.
How it works
In simplified terms, the rule suggests withdrawing 4% of your starting portfolio in year one and then adjusting that dollar amount for inflation over time.
That makes it a useful bridge between annual spending and a rough retirement number.
Why it is not a guarantee
The original research was not a promise for every market environment or every retirement length.
Valuations, fees, taxes, spending flexibility, and sequence risk all affect what is actually sustainable.
Conclusion
The 4% rule is a valuable starting point. It becomes more useful when paired with scenario testing and a more detailed withdrawal model.
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