Under the 4% rule, a $1,000,000 portfolio supports $40,000 a year, or $3,333 a month, in the first year of retirement.
- 3%
- 4%
- 5%
| Portfolio | 3% | 3.5% | 4% | 4.5% | 5% | Monthly at 4% |
|---|---|---|---|---|---|---|
| $250,000 | $7,500 | $8,750 | $10,000 | $11,250 | $12,500 | $833 |
| $500,000 | $15,000 | $17,500 | $20,000 | $22,500 | $25,000 | $1,667 |
| $750,000 | $22,500 | $26,250 | $30,000 | $33,750 | $37,500 | $2,500 |
| $1,000,000 | $30,000 | $35,000 | $40,000 | $45,000 | $50,000 | $3,333 |
| $1,250,000 | $37,500 | $43,750 | $50,000 | $56,250 | $62,500 | $4,167 |
| $1,500,000 | $45,000 | $52,500 | $60,000 | $67,500 | $75,000 | $5,000 |
| $2,000,000 | $60,000 | $70,000 | $80,000 | $90,000 | $100,000 | $6,667 |
| $2,500,000 | $75,000 | $87,500 | $100,000 | $112,500 | $125,000 | $8,333 |
| $3,000,000 | $90,000 | $105,000 | $120,000 | $135,000 | $150,000 | $10,000 |
How it is computed
Withdrawal = portfolio × rate. Under the 4% rule, you take 4% of the starting balance in year one and raise that amount with inflation each year after; the table shows the first-year amount, before tax.
FAQ
Is the 4% rule safe?+
It held over 30-year retirements in US historical data for a balanced stock and bond mix. For longer retirements, high fees or a cautious outlook, many planners use 3% to 3.5%.
Is the withdrawal before or after tax?+
Before tax. Withdrawals from registered or tax-deferred accounts are taxed as income, so your spending money will be lower.