Glossary
Safe Withdrawal Rate
The percentage of a portfolio you can withdraw annually with high odds it lasts through retirement — 4% is the classic benchmark.
The safe withdrawal rate (SWR) is the percentage of a retirement portfolio you can withdraw in year one — then adjust for inflation annually — with high historical odds of the money outliving you. The famous benchmark is 4%, from research by William Bengen and the “Trinity study,” which tested withdrawal strategies against every historical US market sequence: a diversified portfolio survived 30-year retirements at 4% initial withdrawals in the overwhelming majority of cases, including retirements that began right before crashes.
Inverted, the SWR produces the most useful number in retirement planning: the portfolio you need is annual spending ÷ SWR — at 4%, exactly 25× annual spending. Spend $50,000 a year, and $1.25 million is the target. This “25× rule” is the entire mathematical foundation of financial independence.
The honest caveats: the research covers 30-year horizons, so early retirees planning 40–50 years often use 3.25–3.75%; the sequence of returns matters (a crash in year two hurts far more than one in year twenty); and rigid inflation-adjusted withdrawals are a modeling assumption — real retirees flex spending in bad years, which materially improves survival odds.
See what your savings rate and SWR imply for your timeline in the FIRE calculator.
Related calculators
- FIRE CalculatorCalculate how many years until financial independence based on your savings rate, using the 4% rule. See how saving more moves your FIRE date.
- Retirement CalculatorProject your retirement savings with employer match, annual raises, and inflation. See your nest egg in today's dollars, year by year.