| Rate | FIRE number | Annual withdrawal | Survives 30 yrs? | Final balance |
|---|
| Withdrawal rate | 100% stocks | 75% stocks | 50% stocks |
|---|---|---|---|
| 3% | 100% | 100% | 100% |
| 4% | 98% | 96% | 87% |
| 5% | 84% | 78% | 57% |
| 6% | 70% | 58% | 37% |
| 7% | 52% | 40% | 22% |
The 4% rule states that you can withdraw 4% of your retirement portfolio in year one, then adjust that amount for inflation each year, and your money should last at least 30 years. It comes from the Trinity Study (1998), a landmark paper by three Trinity University professors who analysed historical US market data from 1926 onwards.
Practically: if you spend $40,000/year, your FIRE number is $40,000 ÷ 0.04 = $1,000,000. The same as multiplying by 25.
Mostly yes, with caveats. The original study used 30-year retirements and US stock/bond data. For early retirees with 40-50 year retirements, a 3.25-3.5% rate is safer. For global portfolios (non-US), historical success rates are lower — some researchers suggest 3.5% as a global safe withdrawal rate.
Updated research through 2023 confirms 4% remains historically robust for 30-year retirements with a 60/40 stock-bond mix. The main risk is a severe bear market in the first 5 years of retirement — see our Sequence of Returns calculator.
Three steps: (1) Calculate your annual expenses — everything you spend in a year. (2) Multiply by 25 (the inverse of 4%). (3) That is your FIRE number.
Example: $60,000/year expenses × 25 = $1,500,000 FIRE number. At 4%, you withdraw $60,000/year and the portfolio should last 30+ years.
Want to be more conservative? Use 28x (3.5% rate) for Fat FIRE or if you retire before 50.
3% (Ultra Safe): 100% historical success rate. Requires 33x expenses. For very early retirees or those with no flexibility.
3.5% (Conservative): Near 100% success. 28.5x expenses. Good for 40+ year retirements.
4% (The Rule): 96-98% success over 30 years. 25x expenses. The standard FIRE target.
5% (Aggressive): 78-84% success. 20x expenses. Requires willingness to cut spending in bad markets.
The table above shows your specific portfolio at each rate, and the Trinity Study section shows historical success rates.
Sequence of returns risk: Two people with identical average returns but different timing can have wildly different outcomes. A crash in year 1 of retirement is devastating. See the calculator.
US-centric data: The original study used only US market data. Global or non-US investors face higher failure rates historically.
Fixed spending: The rule assumes inflation-adjusted spending stays constant. Most retirees naturally spend less as they age.
Long retirements: For 40-50 year retirements (retiring at 40), the 4% rule has lower success rates. Use 3.25-3.5%.