Retirement withdrawal calculator
The 4% rule came from a 1994 study of historical US returns. It is a rule of thumb about sequence risk, not a guarantee.
%
Sustainable annual income
32 000.00
- Per month
- 2666.67
- Pot needed for your target income
- 1 000 000.00
- Shortfall against that
- 200 000.00
- Multiple of annual spending needed
- 25.0
Show the working
- Retirement pot = 800 000
- Withdrawal rate = 4
- Income you want = 40 000
- Sustainable annual income = 800 000 * 4 / 100 = 32 000
- Per month = 32 000 / 12 = 2666.67
- Pot needed for your target income = 40 000 * 100 / 4 = 1 000 000
- Shortfall against that = 1 000 000 - 800 000 = 200 000
- Multiple of annual spending needed = 100 / 4 = 25
Values are shown to six significant figures here; the arithmetic itself runs on exact fractions and is only rounded where a number is printed.
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The formula
- annual income = pot x withdrawal rate
- pot needed = target income / withdrawal rate
The original study covered 30-year retirements funded by a US stock and bond portfolio. Longer retirements, other markets and higher fees all argue for a lower rate.
This is arithmetic, not financial advice. Real products carry fees, tax treatment and terms that no formula captures.