Definition
The 4% rule estimates how much portfolio value may be needed to support ongoing withdrawals in retirement planning frameworks.
Formula: Required portfolio = Annual expenses / 0.04
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Retirement Rule
The 4% Retirement Rule
Estimate portfolio size from annual spending.
The rule models a starting annual withdrawal of 4% from an invested retirement corpus. It is commonly reframed as a 25x annual expense target.
4%Starting withdrawal
25xExpense multiple
ModelNot a guarantee
Explanation
Mechanism and formula.
Assumptions and limitations
- Long-term return and inflation behavior are uncertain.
- Sequence-of-returns risk can change outcomes.
- It is a baseline heuristic, not a retirement guarantee.
Calculator
Estimate your 4% rule corpus target.
Enter annual expense and expected withdrawal rate to estimate required corpus and first-year withdrawal amount.
Required portfolio—
First-year withdrawal—
Expense multiple—
Example Scenario
Sample retirement baseline.
Scenario inputs
- Annual expenses: INR 600,000
- Withdrawal rate: 4%
Calculation walkthrough
- Corpus target = 600,000 / 0.04 = INR 15,000,000
- Expense multiple = 15,000,000 / 600,000 = 25x
- First-year withdrawal baseline = INR 600,000
Chart
Expense vs corpus target chart.
The chart updates with calculator values.
Disclaimer: The 4% rule is an analytical heuristic and not financial advice. Retirement adequacy depends on inflation, return sequence, taxes, fees, and withdrawal flexibility.