4% Withdrawal Rate Calculator

Here’s a comprehensive table summarizing all you need to know about the 4% Withdrawal Rate:

Aspect	Details
Definition	A retirement strategy suggesting withdrawing 4% of the initial portfolio balance in the first year of retirement, then adjusting that amount for inflation each subsequent year12.
Origin	Developed by financial advisor William Bengen in 1994, based on historical stock and bond returns from 1926 to 197656.
Intended Duration	Designed to make retirement savings last for approximately 30 years12.
Portfolio Allocation	Typically assumes a balanced portfolio of about 50% stocks and 50% bonds13.
Inflation Adjustment	The initial withdrawal amount is adjusted annually for inflation12.
Probability of Success	Ranges from 90% to 98%, depending on various factors.
Advantages	Simple to follow, provides predictable income, aims to protect from running out of money1.
Limitations	Doesn’t account for market conditions, taxes, fees, or long-term care costs57.
Current Relevance	Some experts suggest 3% might be safer, while others propose 5% could be more realistic14.
Alternatives	Dynamic withdrawal strategies, lower fixed rates, or personalized approaches based on individual circumstances5.
Considerations	Personal factors like retirement age, life expectancy, risk tolerance, and desired lifestyle should be taken into account28.
Recent Updates	As of 2023, some research suggests a 4% withdrawal rate may be more feasible due to current market conditions4.

This table provides a concise overview of the 4% Withdrawal Rate, including its definition, origins, intended use, advantages, limitations, and current considerations. It’s important to note that while the 4% rule can be a useful guideline, it should be adapted to individual circumstances and regularly reviewed with changing market conditions.