PracticeStudy GuidesBlogFlashcardsPartner

4% Rule (Retirement Withdrawal)

The 4% rule suggests withdrawing 4% of your initial portfolio in the first year, then adjusting for inflation annually, with a high probability of not running out of money over 30 years.

Get personalized explanations
šŸ’”

Exam Tip

4% rule = Trinity Study. Assumes 30-year retirement. Early retirees may need 3-3.5%.

What is the 4% Rule?

The 4% rule is derived from the Trinity Study (1998) for sustainable retirement withdrawals.

How It Works

YearCalculation
Year 14% Ɨ Initial Portfolio
Year 2+Previous + inflation

Assumptions

  • 30-year retirement
  • 50-75% stocks
  • Annual rebalancing

Study This Term In

Series 65Series 66

Related Terms

RMD (Required Minimum Distribution)

RMDs are mandatory annual withdrawals from traditional retirement accounts (Traditional IRA, 401(k)) that must begin at age 73, calculated based on account balance and life expectancy.

Learn More with AI

10 free AI interactions per day

Stay Updated

Get free exam tips and study guides delivered to your inbox.

ā† Back to Full Glossary