Blog
The 4% rule says: withdraw 4% of your portfolio in year one of retirement, then adjust that dollar amount for inflation each year. On a $1,250,000 portfolio, you withdraw $50,000 in year one. If inflation is 3%, you withdraw $51,500 in year two. This approach survived about 95% of historical 30-year periods since 1926.
But you are not planning a 30-year retirement. You are planning a 40 or 50-year retirement. And 2026 market conditions are not 1926. So the question is: does the 4% rule still work?
Financial planner William Bengen published the original research in 1994. He tested every possible 30-year retirement period starting from 1926 through 1963 (the last year with 30 years of subsequent data). His question: what is the highest withdrawal rate that would have survived every historical 30-year period?
The answer was 4.15%, which he rounded down to 4% for safety. In 1998, three professors at Trinity University (Philip Cooley, Carl Hubbard, and Daniel Walz) expanded the research, testing more portfolios and more time periods. Their findings confirmed Bengen's 4% guideline. This became known as the Trinity Study.
Key details most people miss about the original research:
If you retire at 35, your money needs to last 50+ years, not 30. Does 4% still work?
Research by Wade Pfau and others tested longer time horizons:
| Retirement Length | 4% SWR Survival Rate | 3.5% SWR Survival Rate | 3.25% SWR Survival Rate |
|---|---|---|---|
| 30 years | ~95% | ~98% | ~99% |
| 40 years | ~88-90% | ~95% | ~97% |
| 50 years | ~82-85% | ~92% | ~95% |
| 60 years | ~78-82% | ~88-90% | ~93% |
At 4% over 50 years, roughly 15-18% of historical periods would have run out of money. That is 1 in 6 odds. At 3.5%, it drops to about 1 in 12. At 3.25%, about 1 in 20.
The FIRE calculator lets you adjust the safe withdrawal rate. Set it to 4% for initial planning (to see your minimum target), then run it again at 3.5% to see the more conservative number. The difference is about 14% more savings — meaningful but achievable.
Test your plan at both 4% and 3.5% withdrawal rates.
Open FIRE Calculator →A 30% market crash in year 15 of retirement is manageable — your portfolio has had 14 years to grow. A 30% crash in year 1 is devastating. You are withdrawing $50,000 from a portfolio that just dropped from $1.25M to $875,000. That $50,000 is now 5.7% of your portfolio, not 4%. If the market stays flat for 3 years, you have withdrawn $150,000 from a portfolio that was already down $375,000.
This is why the 4% rule fails in those 5-18% of historical periods — not because the average return is too low, but because the bad years came first.
How to protect against it:
The 4% rule assumes inflation averaging 2-3% historically. If inflation runs at 5-6% for an extended period (as it did in 2021-2023), your inflation-adjusted withdrawals grow faster than expected. Using 7% expected returns (which accounts for historical average inflation) provides a buffer, but sustained high inflation is a stress test for any withdrawal strategy.
Instead of a fixed inflation-adjusted dollar amount, withdraw a percentage of your current portfolio each year. In good years, you withdraw more. In bad years, less. This naturally prevents portfolio depletion but means your income fluctuates. Works well for people with flexible spending.
Set upper and lower guardrails around 4%. If your withdrawal rate rises above 5% (because portfolio dropped), cut spending by 10%. If it falls below 3% (because portfolio grew), increase spending by 10%. This keeps you within a safe zone while allowing some flexibility.
Target 3.25-3.5% SWR for planning purposes, which means your portfolio will likely grow in retirement. Use the 4% number as your spending ceiling in any given year. This builds in a natural buffer — you plan conservatively but have room to spend more when markets cooperate.
For the full FIRE planning guide, see our FIRE calculator walkthrough. For how savings rate interacts with withdrawal rate, our savings rate guide covers the math. And for what Reddit's FIRE community specifically recommends, check our Reddit roundup.