The 4% Rule

The 4% Rule is a guideline for how much of your savings you can withdraw annually in retirement without running out of money. It suggests you can take out 4% of your total retirement savings during the first year, then adjust that amount for inflation each year. This approach aims to provide a steady income for about 30 years by balancing spending with the longevity of your savings, assuming a diversified investment portfolio. It’s a helpful starting point for planning, but individual needs and market conditions should also be considered.