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How much can I take out each year without running out?
$40,
This week: write down what you actually need to spend in a year, then compare it with this withdrawal.
| Strategy | Initial withdrawal | Success rate | Flexibility | Risk level | Worst case |
|---|
Each strategy starts at a different rate, so the success column mostly reflects the starting rate, not the strategy.
Written by Elizabeth Stein
On a $1,000,000 portfolio, the 4% Rule takes an initial withdrawal of $40,000 in year one, then increases that amount each year by inflation regardless of how the portfolio performed. In a year the market drops, you still take the inflation-adjusted $40,000-plus; the rule doesn't flex. That rigidity is exactly what strategies like Guardrails and Dynamic Withdrawal are built to avoid, at the cost of a less predictable income.
Finance Quest is educational. It is not financial advice, and no calculator here knows your full situation.
An 85% success rate means 150 of 1,000 simulated retirements ran out of money before the end. That's not a small number, and it says nothing about which 15% you'll land in, or how it would feel to be three years from running out with real bills to pay. Use the success rate to compare strategies against each other, and treat sequence-of-returns risk (a bad market early in retirement) as the specific danger these simulations are trying to capture, not a footnote.
It's a rule of thumb built on historical US market data over 30-year retirements, and it isn't a fixed law. Longer retirements, lower expected future returns, or a large market drop early on can all lower the safe rate below 4%. Published research on safe starting rates gives different answers depending on the stock share, the horizon and whether spending can flex, and some recent studies land below 4% for fixed spending.
The danger that a market downturn hits in your first few retirement years, while you're also withdrawing money. Selling into a decline locks in losses that a portfolio never has the same chance to recover from, compared to the same downturn happening later after years of growth already cushioned the balance.
It depends on your inputs. Flexible strategies can show higher success rates than a fixed one that starts at the same rate, because they cut spending after a bad stretch. In this lab each strategy starts at its own rate, so the success column mostly reflects the starting rate. The trade-off for flexibility is a less predictable income year to year.
Not directly. This tool only models withdrawals from the portfolio balance you enter. If Social Security or a pension will cover part of your spending, reduce the portfolio's target withdrawal to reflect only the gap those sources don't cover.