Retirement (4% Rule) Calculator
The nest egg you need to retire on a target yearly spend.
Input sheet
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The 4% rule is the best-known shorthand for retirement planning: it estimates the nest egg you need by working backward from how much you want to spend each year.
How it works
The 4% rule: divide annual spending by the withdrawal rate. At 4%, you need 25× your yearly spend.
The rule says you can withdraw about 4% of your portfolio in the first year of retirement, adjust for inflation thereafter, and have a high chance of the money lasting roughly 30 years. Flipping that around, the nest egg you need is your annual spending divided by the withdrawal rate — at 4%, that's 25 times your yearly spend.
The withdrawal rate is the dial that changes everything. A more conservative 3.5% rate demands a larger nest egg but buys more safety against bad market sequences; a 5% rate needs less savings but raises the risk of running short. This calculator lets you pick the rate that matches your risk tolerance.
Nest egg needed = annual spending ÷ withdrawal rate
Worked examples
$60,000 annual spending at the classic 4% rate → $1,500,000 nest egg needed
$60,000 ÷ 0.04 = $1,500,000 — that's the 25× rule in action.
$60,000 spending at a conservative 3.5% rate → ≈ $1,714,000 nest egg needed
A lower withdrawal rate buys more safety but raises the target: $60,000 ÷ 0.035 ≈ $1,714,000.
Tips & gotchas
- Count only the spending your portfolio must cover — subtract Social Security, a pension, or annuity income from your annual figure first, since those reduce what you need to save.
- The 4% rule is a planning guideline drawn from historical U.S. data, not a guarantee; early retirees and those expecting a 40+ year horizon often plan around 3.5% or lower.
- Inflation matters: aim for a nest egg that supports your spending in future dollars, and keep a growth-oriented allocation to stay ahead of rising costs.
- Build in flexibility — being willing to trim spending in down markets dramatically improves how long the money lasts.
FAQ
Is the 4% rule still reliable?
It remains a reasonable planning anchor, but it's based on historical averages and assumes a roughly 30-year retirement and a balanced portfolio. Longer horizons or pessimistic return assumptions argue for a lower rate.
Does this include Social Security?
No. Enter only the spending your savings need to cover after subtracting Social Security, pensions, or other guaranteed income, which lowers the nest egg you must build.
Why does a small change in withdrawal rate move the target so much?
Because you're dividing by the rate, dropping from 4% to 3.5% raises the required nest egg by over 14%. Small rate choices have large effects on the savings goal.
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