Safe Withdrawal Rate Calculator
Run 1,000 Monte Carlo simulations to see if your retirement spending is sustainable.
How this is calculated
The classic "4% rule" comes from a single historical study of past US market returns. Monte Carlo simulation improves on it by generating thousands of possible future return sequences from a statistical model — rather than assuming the future will look exactly like one particular stretch of history — so you get a probability of success rather than a single pass/fail answer.
If your success probability comes back below 95%, you have three main levers: reduce your planned annual spending, increase your stock allocation to raise expected returns (at the cost of more volatility), or extend your working years to grow the portfolio further before you start withdrawing.
Frequently asked questions
- What is the 4% rule?
- The 4% rule comes from the Trinity Study (1998), which found that withdrawing 4% of a portfolio in the first year of retirement, then adjusting that dollar amount for inflation each year, historically survived a 30-year horizon with a 50/50 stock/bond allocation about 95% of the time.
- What does "success probability" mean?
- The percentage of the 1,000 simulated retirements where the portfolio balance never reached zero before the end of your retirement horizon.
- How is this different from historical simulation?
- This calculator uses parametric Monte Carlo — a statistical model of returns based on assumed mean and volatility — rather than replaying specific historical years. It is historically grounded but not tied to any single sequence of past returns.
- What return assumptions are used?
- Stocks: 7% real (inflation-adjusted) mean annual return, 15% standard deviation. Bonds: 1.5% real mean, 6% standard deviation. These are long-run estimates drawn from US market history.
- Why does allocation matter?
- A higher stock allocation increases both average returns and volatility. Portfolios that are very heavy in bonds often fail due to low real returns despite their low volatility.
- Is a 95% success rate enough?
- It is a common professional benchmark. Some planners prefer 90% and expect the retiree to make lifestyle adjustments if markets underperform; others target 99% with a lower starting withdrawal rate.
- Does this account for taxes?
- No — all figures are pre-tax. If you hold a taxable account, model a higher gross withdrawal to account for your marginal tax rate.
- Can I use this in my own app?
- Yes — every calculator on Stupidly Clever has a matching REST API and MCP tool that runs the same underlying logic.