Four Percent Rule Calculator
body {
font-family: 'Segoe UI', Tahoma, Geneva, Verdana, sans-serif;
background-color: #f8f9fa;
color: #333;
line-height: 1.6;
margin: 0;
padding: 20px;
}
.loan-calc-container {
max-width: 700px;
margin: 30px auto;
background-color: #ffffff;
padding: 30px;
border-radius: 8px;
box-shadow: 0 4px 15px rgba(0, 0, 0, 0.1);
}
h1, h2 {
color: #004a99;
text-align: center;
margin-bottom: 20px;
}
.input-group {
margin-bottom: 20px;
display: flex;
flex-direction: column;
align-items: flex-start;
}
.input-group label {
display: block;
margin-bottom: 8px;
font-weight: bold;
color: #004a99;
}
.input-group input[type="number"] {
width: 100%;
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
box-sizing: border-box;
font-size: 1rem;
}
.input-group input[type="number"]:focus {
border-color: #004a99;
outline: none;
box-shadow: 0 0 5px rgba(0, 74, 153, 0.3);
}
button {
display: block;
width: 100%;
padding: 12px 20px;
background-color: #004a99;
color: white;
border: none;
border-radius: 4px;
font-size: 1.1rem;
cursor: pointer;
transition: background-color 0.3s ease;
margin-top: 10px;
}
button:hover {
background-color: #003a7a;
}
#result {
margin-top: 30px;
padding: 20px;
background-color: #e6f2ff;
border-left: 5px solid #28a745;
border-radius: 4px;
text-align: center;
}
#result h3 {
margin-top: 0;
color: #004a99;
}
#result-value {
font-size: 2.5rem;
font-weight: bold;
color: #28a745;
}
.article-content {
margin-top: 40px;
padding: 20px;
background-color: #ffffff;
border-radius: 8px;
box-shadow: 0 4px 15px rgba(0, 0, 0, 0.1);
}
.article-content h2 {
text-align: left;
color: #004a99;
margin-bottom: 15px;
}
.article-content p {
margin-bottom: 15px;
}
.article-content ul {
margin-left: 20px;
margin-bottom: 15px;
}
.article-content li {
margin-bottom: 8px;
}
/* Responsive adjustments */
@media (max-width: 600px) {
.loan-calc-container {
padding: 20px;
}
button {
font-size: 1rem;
}
#result-value {
font-size: 2rem;
}
}
Four Percent Rule Calculator
Estimate your sustainable annual withdrawal from retirement savings.
Your Estimated Sustainable Annual Withdrawal:
$0.00
Understanding the Four Percent Rule
The Four Percent Rule is a widely cited guideline in retirement planning. It suggests that if you withdraw 4% of your retirement savings portfolio in your first year of retirement, and then adjust that withdrawal amount for inflation each subsequent year, your savings will likely last for at least 30 years.
How the Calculation Works
The core of the Four Percent Rule is straightforward. It's based on historical market data and aims to provide a sustainable income stream without depleting your principal too quickly. The calculation is as follows:
- Annual Withdrawal = Total Investment Portfolio Value × 0.04
Our calculator takes this a step further by allowing you to see projected withdrawals based on different frequencies, although the 4% principle remains the basis for the annual figure.
Key Considerations and Use Cases
The Four Percent Rule is a useful starting point, but it's not a foolproof guarantee. Several factors can influence its effectiveness:
- Market Volatility: The rule assumes a diversified portfolio and relies on historical average returns. Significant market downturns, especially early in retirement, can impact longevity.
- Time Horizon: While designed for 30 years, some retirees may need their savings to last longer, requiring a more conservative withdrawal rate (e.g., 3% or 3.5%). Conversely, shorter retirement periods might allow for slightly higher rates.
- Inflation: The rule accounts for inflation by adjusting the withdrawal amount annually. However, periods of unexpectedly high inflation can put pressure on the sustainability.
- Taxes: Withdrawals from retirement accounts are often taxable. The 4% figure is typically a pre-tax amount, and you must factor in taxes when determining your net spendable income.
- Expenses: Your actual spending needs will vary. The Four Percent Rule provides a guideline, but a detailed budget is crucial for accurate planning.
- Portfolio Allocation: The success of the rule is heavily dependent on the asset allocation of your investment portfolio. A balanced mix of stocks and bonds is generally assumed.
How to Use the Calculator
- Enter the total value of your investment portfolio in USD.
- Select your preferred withdrawal frequency (Annual, Semi-Annual, Quarterly, or Monthly).
- Click "Calculate Sustainable Withdrawal".
The calculator will then provide an estimated annual withdrawal amount based on the Four Percent Rule. For other frequencies, it divides the annual amount accordingly.
function calculateWithdrawal() {
var portfolioValue = parseFloat(document.getElementById("investmentPortfolio").value);
var frequency = document.getElementById("withdrawalFrequency").value;
var resultValueElement = document.getElementById("result-value");
var resultSubtextElement = document.getElementById("result-subtext");
if (isNaN(portfolioValue) || portfolioValue <= 0) {
resultValueElement.textContent = "Invalid Input";
resultSubtextElement.textContent = "Please enter a valid positive number for your portfolio value.";
resultValueElement.style.color = "#dc3545";
return;
}
var annualWithdrawalRate = 0.04;
var rawAnnualWithdrawal = portfolioValue * annualWithdrawalRate;
var displayAnnualWithdrawal = rawAnnualWithdrawal.toFixed(2);
var withdrawalPerPeriod = rawAnnualWithdrawal;
var periodText = "";
switch (frequency) {
case "semi_annual":
withdrawalPerPeriod = rawAnnualWithdrawal / 2;
periodText = "Semi-Annual";
break;
case "quarterly":
withdrawalPerPeriod = rawAnnualWithdrawal / 4;
periodText = "Quarterly";
break;
case "monthly":
withdrawalPerPeriod = rawAnnualWithdrawal / 12;
periodText = "Monthly";
break;
case "annual":
default:
withdrawalPerPeriod = rawAnnualWithdrawal;
periodText = "Annual";
break;
}
resultValueElement.textContent = "$" + withdrawalPerPeriod.toFixed(2);
resultSubtextElement.textContent = `This is approximately ${periodText} amount. The estimated annual withdrawal is $${displayAnnualWithdrawal}.`;
resultValueElement.style.color = "#28a745";
}