The 4% Rule: How Much Money Do You Need to Retire?
The 4% rule is the closest thing to a universal retirement guideline. It provides a simple answer to one of the hardest questions: how much money do I need to retire?
How the 4% Rule Works
Withdraw 4% of your retirement portfolio in year one, then adjust for inflation each subsequent year. Research from the Trinity Study found this withdrawal rate has historically sustained portfolios for 30+ years with a high probability of success.
Your retirement number = Annual expenses ÷ 0.04
Spending $50,000/year? You need $1.25 million. Spending $80,000? You need $2 million.
The Math Made Simple
| Annual Spending | Retirement Number |
|---|---|
| $30,000 | $750,000 |
| $50,000 | $1,250,000 |
| $75,000 | $1,875,000 |
| $100,000 | $2,500,000 |
Limitations of the 4% Rule
- Based on historical US market data — future returns may differ
- Designed for 30-year retirements; early retirees (40s–50s) may need 3–3.5%
- Assumes a stock/bond portfolio; doesn't account for Social Security or pensions
- Doesn't account for large variable expenses (healthcare, travel, home repair)
Adjusting for Your Situation
If you have Social Security income, subtract it from your annual spending before applying the rule. If you'll have a pension, subtract that too. The rule only applies to the portfolio portion of your retirement income.
Calculate Your Retirement Number
Use our retirement calculator to find your monthly savings target.
Calculate →