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Portfolio Sustainability Calculator
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4% is the classic "safe" rate from the Trinity Study. 3-3.5% is more conservative; 5%+ is aggressive.
Historical real return: ~7% S&P 500, ~5% 60/40, ~2% bonds. We use REAL return so withdrawals stay constant in today's dollars.
Uses constant real-return assumption. Real markets have sequence-of-returns risk — a bad first decade can deplete a portfolio that would otherwise survive. Consider Monte Carlo for more robust planning.
Enter your portfolio and rate to simulate retirement.
Background
Where the 4% Rule Comes From
The 4% rule originated in the 1998 Trinity Study by three Trinity University finance professors. They backtested retirement portfolios across every rolling 30-year period from 1925–1995. Their conclusion: a portfolio of 50% stocks and 50% bonds, with 4% inflation-adjusted annual withdrawals, would have survived every historical 30-year period with high probability.
The rule rephrased: You can retire when you've saved 25 × your annual expenses (because 4% × 25 = 100%). Need $60,000/year? Save $1.5M. Need $100,000/year? Save $2.5M. Subtract Social Security and pensions from expenses first.
Reference
Withdrawal Rate Quick Reference
| Rate | Approach | Per $1M portfolio | Historical 30-yr success |
|---|---|---|---|
| 3.0% | Very conservative | $30,000/yr | ~100% |
| 3.5% | Conservative | $35,000/yr | ~99% |
| 4.0% | Trinity Study "safe" | $40,000/yr | ~95% |
| 4.5% | Moderate | $45,000/yr | ~85% |
| 5.0% | Aggressive | $50,000/yr | ~70% |
| 6.0%+ | High risk | $60,000+/yr | <50% |
Historical success rates assume a 60/40 stock/bond allocation over 30-year retirements (1928–2025 rolling periods). Actual results vary with asset allocation, fees, and sequence of returns.
FAQ
Common Questions
Is the 4% rule still valid?
It's been debated. With high current valuations and lower bond yields, some researchers (like Wade Pfau and Morningstar) have suggested 3.3–3.8% is safer for new retirees. Others, including Bill Bengen (creator of the original 4% rule), have argued you can safely withdraw 4.5–5%. The honest answer: 4% is a reasonable starting point, but flexibility (cutting spending in down years) matters more than picking the "perfect" rate.
What is sequence-of-returns risk?
If your portfolio suffers a big loss in the first few years of retirement, you're forced to sell more shares to fund the same withdrawal — permanently shrinking your capital base. Two retirees with identical average returns can have very different outcomes if one starts in a bull market and the other in a bear market. Strategies to mitigate: hold 2-3 years of cash, use a bond ladder, or reduce withdrawals after a down year.
Should I include Social Security in my withdrawal calculation?
Yes — but separately. Calculate your annual expenses, subtract Social Security and any pensions, and apply the withdrawal rate to the remaining shortfall. Example: $80K expenses − $30K Social Security = $50K from portfolio. At 4%, you need $1.25M, not $2M.
What if I retire early (before 60)?
FIRE adherents (Financial Independence, Retire Early) typically plan 40–50 year retirements. The standard 4% rule was designed for 30 years. For longer horizons, consider 3-3.5% as the safe rate, or use variable withdrawal strategies (like the Guyton-Klinger rules) that adjust spending based on portfolio performance.