Safe Withdrawal Rate Calculator
The 4% rule says you can safely withdraw 4% of your retirement portfolio in year one, adjust for inflation each year, and have a high probability of never running out of money. But is 4% really safe for your situation? This safe withdrawal rate calculator uses 1,000 Monte Carlo simulations to stress-test your withdrawal strategy across thousands of possible market scenarios — not just one historical average.
Your safe withdrawal rate depends on your retirement length, asset allocation, and risk tolerance. Early retirees facing 40–50 year horizons may need 3–3.5%. Traditional retirees with 25–30 year horizons might be fine at 4%. This calculator helps you find the withdrawal rate that gives you the confidence level you need — whether that's 95% certainty or something more aggressive.
With a 4.0% withdrawal rate on $1,000,000, you withdraw $40,000/year ($3,333/month). Over 30 years with 75% stocks, Monte Carlo simulation shows a 85% success rate — acceptable but with some risk.
Simulation inputs
Total investable assets
4% is the classic rule. 3–3.5% for extra safety.
25% bonds. Higher stocks = higher returns + volatility
30 years is standard. 40–50 for early retirees.
Historical average: ~3%. Withdrawals increase with inflation each year.
Annual withdrawal
$40,000
$3,333/month (not adjusted for inflation)
Monte Carlo Results
1000 simulations run
Success Rate (portfolio survives 30 years)
85.0%
85 out of 1000 simulations had money left after 30 years
Withdrawal/Year
$40,000
Year 1 amount
Withdrawal/Month
$3,333
Before inflation
Stocks / Bonds
75/25
Asset allocation
Portfolio Projection (Percentiles)
10th, 50th (median), and 90th percentile outcomes
| Year | Worst 10% | Median | Best 10% |
|---|---|---|---|
| 0 | $1,000,000 | $1,000,000 | $1,000,000 |
| 5 | $788,920 | $1,198,293 | $1,753,731 |
| 10 | $733,935 | $1,452,664 | $2,655,933 |
| 15 | $575,538 | $1,729,450 | $3,962,145 |
| 20 | $464,908 | $2,087,235 | $5,885,300 |
| 25 | $528,305 | $2,732,730 | $8,956,535 |
| 30 | $645,067 | $3,751,600 | $13,439,109 |
How withdrawal rate affects success
Success rate at different withdrawal rates with your current settings
How to use this calculator
Portfolio value at retirement — Your total investable assets on the day you retire. This includes 401(k), IRA, brokerage accounts, and any other investments. Don't include your home equity unless you plan to sell and invest it. A common milestone: $1M at 4% = $40K/year in withdrawals.
Withdrawal rate — The percentage of your portfolio you withdraw in year one. Each subsequent year, that dollar amount increases with inflation. The classic 4% rule comes from the Trinity Study, but many FIRE planners prefer 3–3.5% for extra safety, especially for longer retirements.
Stock allocation — The percentage of your portfolio in stocks (equities), with the rest in bonds. Higher stock allocations provide better long-term returns but more volatility. The Trinity Study found 75% stocks / 25% bonds had the highest success rate for 30-year retirements. Early retirees often prefer 60–75% stocks.
Retirement length — How many years your portfolio needs to last. Traditional retirees use 25–30 years. Early retirees in their 30s or 40s should use 50–60 years. Longer horizons require lower withdrawal rates to maintain the same success probability.
Inflation rate — How much your withdrawals increase each year to maintain purchasing power. The historical US average is about 3%. Your withdrawals in year 20 will be much higher than year 1 — at 3% inflation, a $40K withdrawal becomes $72K after 20 years.
Real-world examples
Traditional retiree: $1M portfolio, 30 years
A 65-year-old with $1M in a 75/25 portfolio withdrawing 4% ($40K/year). Monte Carlo shows a ~95% success rate over 30 years. Dropping to 3.5% ($35K/year) pushes success above 98%. For most traditional retirees, 4% is a reasonable starting point — but 3.5% provides a stronger safety margin.
Early retiree: $1.5M portfolio, 50 years
A 40-year-old FIRE retiree with $1.5M needs the portfolio to last 50 years. At 4% ($60K/year), success drops to ~80% — a 1-in-5 chance of running out of money. At 3.5% ($52.5K/year), success improves to ~90%. At 3% ($45K/year), it reaches ~96%. For long retirements, 3–3.5% is the new 4%.
Conservative portfolio: 50/50 stocks and bonds
A $1M portfolio with only 50% stocks and 4% withdrawal over 30 years shows about ~85% success — noticeably lower than the 75/25 allocation's ~95%. Bonds reduce volatility but also reduce long-term returns. The sweet spot for most retirees is 60–80% stocks, which balances growth and stability.
Formula & Methodology
Monte Carlo simulation
Instead of relying on a single historical sequence, Monte Carlo generates 1,000 random market scenarios. Each simulation draws annual returns from a normal distribution based on your expected return and portfolio volatility, then tracks your portfolio balance over the retirement period.
Expected portfolio return
- R_stock = 10% (long-term nominal stock market return)
- R_bond = 5% (long-term nominal bond return)
- w_stock, w_bond = Your stock/bond allocation weights
Portfolio volatility
- σ_stock = 18% (stock market standard deviation)
- σ_bond = 6% (bond standard deviation)
- ρ = 0.2 (stock-bond correlation)
Annual withdrawal with inflation adjustment
Each year's withdrawal increases by the inflation rate to maintain constant purchasing power.
Success rate
A simulation "succeeds" if the portfolio balance remains positive throughout the entire retirement period. 95%+ is generally considered safe, 85–95% is acceptable with some risk, and below 85% is risky.
Assumptions & limitations
- Returns follow a normal distribution. Real markets have fat tails — extreme events happen more often than the model predicts.
- Correlations between stocks and bonds are assumed constant. In crises, correlations often increase.
- Taxes, fees, and transaction costs are not included. Actual returns will be lower.
- Sequencing risk is partially captured but not fully. A bad first decade of retirement is worse than a bad last decade.
- The model uses historical average returns. Future returns may be lower due to higher valuations and lower bond yields.
- No dynamic spending adjustments. In practice, retirees often spend less during market downturns (guardrails strategy).