What Is Your Safe Withdrawal Rate?

Does the 4% Rule Work for You?

The 4% rule — from the Trinity Study — found that withdrawing 4% of your portfolio in year one, then adjusting for inflation, survived 95%+ of 30-year retirements using historical US data.

But the 4% rule has important limitations:

• Designed for 30-year retirements. Early retirees need 40–50 years.
• Based on US market history. Other countries have lower historical returns.
• Doesn't account for flexible spending adjustments.
• Worst-case scenarios involve retiring just before a major crash.

For early retirees with 40–50 year horizons, 3% to 3.5% provides greater safety.

The Biggest Threat to Retirement

Sequence of returns risk is the danger that a market crash in the first 5–10 years of retirement permanently damages your portfolio — even if long-term average returns are fine.

When you're withdrawing money, a 40% portfolio crash early in retirement has a permanently devastating effect that the subsequent recovery cannot fully reverse. This is why:

• Retiring in 2000 (dot-com peak) vs. 2003 (trough) had completely different outcomes at the same savings level
• Monte Carlo simulation models all possible sequences of returns — including the catastrophic ones
• Your safe withdrawal rate depends heavily on when you retire relative to market cycles