What is a safe withdrawal rate?
A safe withdrawal rate is the share of your portfolio you can spend each year with a low chance of running out, commonly 4%.
The 4% rule comes from studies of historical US returns: withdrawing 4% of a portfolio in the first year, then adjusting for inflation, usually lasted at least 30 years.
Early retirees often pick 3% to 3.5% because their money has to last longer. Fees, tax and a market fall early in retirement all reduce what is safe.
Example
A $1 million portfolio at 4% supports about $40,000 of spending in the first year.
In Fireball
Fireball uses 4% by default, lets you set your own rate and stress tests the plan against 5,000 possible market outcomes.
Get Started