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% Withdrawl Rule

% Withdrawl Rule

Nick Name
4% Rule
Parent term
Financial Planning

The 4% rule suggest that retired investors can take 4% out of their portfolio every year without risking losing out of money

  • Is a standard benchmark in financial planning
  • Assumes interest income and gains on equities
  • The withdrawl % has gone down as interest rates have gone down and asset values have gone up
    • In the past when interest rates were higher, this used to the 6% rule
  • A 2014 study from Texas Tech showed there is a 57% probability of portfolio favor using the 4% rule of 30 years (with 50/50 split)

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