4% rule

The 4% rule says you can withdraw 4% of your portfolio in your first year of retirement, then raise that amount with inflation each year, with a high chance the money lasts at least 30 years.

Where it comes from

It comes from financial planner William Bengen's 1994 research and the later "Trinity study", which tested withdrawals against historical US stock and bond returns.

The caveats

It is a rule of thumb based on the past, not a guarantee. People retiring early, with 40 or 50 years ahead, often plan for a lower rate such as 3 to 3.5%.