Find the sustainable annual spending number for a retirement portfolio under the Trinity Study 4% rule — and stress-test it against more conservative 3.5% and 3% withdrawal levels.
The conventional answer is 4% of the portfolio in year one, then adjust that dollar amount up for inflation every year. A $1,000,000 portfolio supports $40,000 in year-one spending — about $3,333 a month. For retirements longer than 30 years or starting in elevated-valuation markets, drop to 3.25-3.5% for the same confidence level.
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Takes about 1 minute.
Where the 4% rule comes from. William Bengen (1994) and the Trinity Study (1998) back-tested 30-year withdrawals from a 50-60% stock portfolio against every starting year from 1926 onwards. They found that a 4% initial withdrawal — adjusted for inflation each subsequent year — sustained the portfolio across 95%+ of those historical periods. The 4% figure became shorthand for the entire framework.
What "safe" actually means. Safe means the portfolio didn't hit zero before year 30. It does not mean the portfolio stays flat. In the median case the original $1 million is still worth $2-3 million inflation-adjusted at the end of 30 years. The 5% failure cases came from retirements starting near major market peaks like 1929, 1937, and 1966.
The 30-year assumption. Most academic work uses 30 years because that's the average retirement length for a 65-year-old. Early FIRE retirees, anyone retiring at 50 or 55, and high life-expectancy populations should stress-test against 40-50 year horizons — at which point 4% drops to 80-85% success and a more conservative 3.25-3.5% rate restores 95% confidence.
Region note. The maths is currency-neutral but the success-rate evidence is mostly US-equity-market. UK and SA portfolios have different volatility profiles. Use the figures as a starting point and adjust downward if your portfolio is concentrated in a single emerging market or a tighter sector. For deep retirement planning, this calculator pairs naturally with the Retirement Drawdown Calculator for year-by-year balance projections.
A 65-year-old retires with $1,000,000 split 60/40 between a US total-stock-market ETF and an aggregate bond fund. Applying the 4% rule, year-one spending is $1,000,000 × 4% = $40,000 — about $3,333 a month before tax. If inflation runs 3% in year one, year-two spending rises to $41,200 (still 4% of the original portfolio in real terms).
Stress-test at 3.5%: year-one spending falls to $35,000, monthly $2,917. The headline cut is $5,000 a year, but the success rate for a 40-year retirement rises from roughly 85% (at 4%) to 95%. The trade is straightforward — give up 12.5% of annual spending to buy a decade more confidence.
Stress-test at 3%: year-one spending falls to $30,000, monthly $2,500. This is the rate Wade Pfau and other researchers recommend for retirements over 40 years starting in elevated-valuation markets. It is also the rate most FIRE blogs converge on once they look honestly at their 50-year horizons.
At zero real return — a deliberately pessimistic stress case where the portfolio earns just enough to cover inflation — $1M divided by $40k of annual spending lasts 25 years. The 4% rule's 95% historical success is largely because real returns averaged 4-5% on top of inflation, not because the maths balances at zero. If you believe future returns will be materially lower than the last century, drop the rate to compensate.
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