4% Rule: How to Withdraw Retirement Savings Without Running Out

When you retire, the 4% rule, a guideline for how much you can safely withdraw from your retirement savings each year without running out of money. Also known as the safe withdrawal rate, it's a simple idea: take out 4% of your total savings in year one, then adjust for inflation every year after that. It sounds easy—until you realize markets don’t always behave, inflation doesn’t always cooperate, and your retirement might last 30, 40, or even 50 years.

The 4% rule came from a 1994 study by Trinity University, testing historical market data from 1926 to 1990. It showed that if you withdrew 4% annually from a portfolio split between stocks and bonds, you had a 95% chance of not running out of money over 30 years. But that was then. Today, interest rates are lower, stock valuations are higher, and life expectancy is longer. Many retirees now find the 4% rule too rigid—or too risky. Some use 3% to be extra safe. Others stretch to 5% because they have other income or lower expenses. The truth? There’s no single number that works for everyone. Your withdrawal rate depends on your portfolio, your risk tolerance, and how long you expect to live.

Related concepts like retirement income, the steady cash flow you rely on after leaving work, and portfolio sustainability, how long your investments can keep paying you without being drained matter just as much. If your portfolio is mostly in bonds, 4% might be too high. If you’re heavily in stocks and can ride out downturns, you might get away with more. And if you have a pension or Social Security, your withdrawal rate from savings can drop—because you’re not relying on your portfolio for everything.

You’ll find posts here that dig into real-world cases: how people adjusted their withdrawals during the 2008 crash, why some retirees switched to dynamic strategies after 2020, and how high-yield savings accounts and emergency funds play into the bigger picture. These aren’t theory pieces—they’re from people who lived it. You’ll also see how the 4% rule connects to other decisions: when to start Social Security, how to handle required minimum distributions, and whether to keep cash on hand for market dips. This isn’t about memorizing a number. It’s about building a plan that adapts as your life changes—and keeps you from running out when you need it most.