The 4% Rule: Retirement Math Every Investor Should Know
The 4% rule is the most cited retirement guideline in personal finance. Here is the full breakdown.
What It Means
Withdraw 4% of your portfolio in year one. Adjust annually for inflation. Based on the Trinity Study (1994) and Morningstar's 2023 update: 95%+ probability of lasting 30 years.
Your Retirement Number = 25× Annual Spending
- $40,000/year → need $1,000,000
- $60,000/year → need $1,500,000
- $80,000/year → need $2,000,000
The Portfolio Composition That Works
50–75% stocks + 25–50% bonds performed best. 100% stocks underperforms due to sequence-of-returns risk.
Modern Caveats
Lower expected returns in 2026 suggest 3.3–3.8% may be safer for 40+ year retirements (Morningstar 2023).
Run Your Numbers
Free FIRE calculator: https://vextorcapital.com/tools/fire-calculator
Full guide: https://vextorcapital.com/learn/retirement-planning
Not financial advice. Consult a qualified financial professional before making retirement decisions.
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