How the 4% Rule Works
The 4% rule is a popular FIRE rule of thumb. It says that a portfolio can potentially support withdrawals of roughly 4% per year over a long retirement, based on historical market research. A common shortcut is:
With a 4% withdrawal rate, the shortcut becomes the familiar FIRE formula:
This calculator helps you turn your monthly spending into an estimated portfolio target. If you want to model long-term investing on the way there, try the Compound Interest Calculator. If you want to project your full path to financial independence, use the FIRE Calculator. You can also learn what the 4% rule means in more detail.
What This Calculator Is Good For
- Estimating your FIRE number from your lifestyle spending
- Comparing a stricter or looser withdrawal rate
- Checking how much annual and monthly spending your target portfolio supports
The 4% rule is a planning shortcut, not a guarantee. Real retirement outcomes depend on returns, taxes, fees, asset allocation, inflation, and how flexible your spending is over time.