Safe Withdrawal Rate (SWR) Calculator
How Much Income Can You Generate?
Retirement Nest Egg
Withdrawal Rate (SWR)
Annual Income
$0
Total yearly withdrawal.
Monthly Income
$0
Estimated monthly income.
Historical Success Rate
Likelihood portfolio lasts 30+ years based on historical data.
Safe Withdrawal Rate (SWR)
The Safe Withdrawal Rate (SWR) is the estimated percentage of your initial portfolio that you can withdraw annually (adjusted for inflation) with a high probability of not running out of money during retirement.
This concept is anchored in the seminal Trinity Study, which analyzed historical market data. The study famously found that a 4% withdrawal rate on a portfolio of 50% stocks and 50% bonds survived every 30-year period in market history up to that point.
Note: SWR usually refers to "historical success" (what worked in the past), which doesn't strictly guarantee future results.
How to Use This Calculator
1. Enter Your Nest Egg
Input the total value of your retirement portfolio. You can sync this with your profile for convenience.
2. Select a Withdrawal Rate
Use the slider to choose the percentage of your portfolio you plan to withdraw each year. The historical success rate for your chosen percentage will be displayed.
3. See Your Potential Income
The calculator will show you the potential annual and monthly income you could receive from your portfolio based on your selected SWR.
Beyond the 4% Rule
Key Findings from History
The Trinity Study highlighted that portfolios with 50% to 75% stocks generally offered the highest success rates. However, for retirement periods longer than 30 years, success rates drop significantly if the withdrawal rate stays at 4%.
Limitations & Criticisms
- Rigidity: The study assumed retirees would blindly withdraw the same inflation-adjusted amount every year, even during crashes. In reality, most people cut spending when the market is down.
- Market Valuations: Some experts argue that when valuations (like CAPE ratio) are high, future returns may be lower, suggesting a lower SWR (e.g., 3.25% - 3.5%).
Modern Alternatives
To mitigate risks and potentially spend more, many modern retirees use dynamic strategies:
- Variable Percentage Withdrawal (VPW): Adjusts withdrawals annually based on current portfolio value and life expectancy.
- Guardrails (Guyton-Klinger): Sets rules to increase withdrawals in good years and decrease them ("tighten the belt") in bad years to prevent depletion.
What's the Next Step?
Your SWR directly influences your retirement target.
- See how your chosen SWR translates into the total nest egg you need with our Financial Independence Number Calculator.
Frequently Asked Questions
What is the 4% Rule?
The 4% Rule is a well-known guideline for retirement withdrawals, originating from a study called the Trinity Study. It suggests that if you withdraw 4% of your initial portfolio value each year, adjusted for inflation, your portfolio has a very high probability of lasting for at least 30 years.
Is the 4% Safe Withdrawal Rate still safe?
Whether the 4% rule is still 'safe' is a topic of much debate. Factors like longer lifespans, lower expected future market returns, and sequence of returns risk have led some financial planners to recommend a more conservative rate, such as 3.5% or lower. This calculator helps you explore the historical success rates of different SWRs.
What is Sequence of Returns Risk?
Sequence of Returns Risk is the danger that the timing of your investment returns is unfavorable. Experiencing poor market returns in the first few years of retirement can have a disproportionately negative impact on your portfolio's longevity, because you are withdrawing money from a shrinking portfolio, which can be difficult to recover from. This is why a 'safe' withdrawal rate is not a guarantee.