For 30 year retirement 4% rule is suggested to be followed. Suppose a prospective retiree wants to plan for 40years, what should be max withdrawal rate

  • The 4% "rule" is a just a rough guideline. If you need retirement to last longer then you could do 3.5%. This is subjective and opinion based so no one can give you a good answer.
    – new name
    Aug 4, 2022 at 17:44
  • The 4% rule has been justified by retrospectively using actual stock and bond returns. For every 30 year period from the 1920's on, the 4% rule on a 50/50 stock/bond portfolio was sufficient to fund a 30 year retirement. You could do (and I'm sure someone has) a similar analysis over 40 year time periods. Aug 4, 2022 at 17:51

1 Answer 1


The 4% rule is based on the results of the Trinity study that broadly found that if you had a mix of 50% stocks to 50% bonds you could withdraw 4% of the total value of the portfolio for up to 30 years and not run out of money 96% of the time. This was based on going back and looking at historical trends in the stock market and calculating the outcome of this withdrawal rate at different points in time. This article offers a more comprehensive summary and explains why the 4% rule may be even more robust than you think (assuming you have the ability to spend less than 4% when the economy is down).

So this is all probabilities-- no one can say for certain that the 4% rule will work for you whenever you choose to retire, but they can say that in the past it has worked 96% of the time. In the case of a 40 year retirement you have a 91% chance of having your money last the entire time. If you wanted to have a 96% chance of having your money last for 40 years you'd need to follow a 3.7% withdrawal rule. You can use this online calculator to mess around with the numbers and see what you get under different scenarios.

One thing worth noting-- following either the 4% rule for 30 years or 3.7% rule for 40 years-- the average outcome of these approaches actually has you doubling your initial investment by the end of the period (as measured by the median result). This helps highlight the fact that this rule is more robust than people actually give it credit for-- if you're able to withdraw less than 4% during the bad years, and compensate by withdrawing more than 4% during the good years you likely have a more than 96% chance of having your money last the whole time.

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    Interesting sentence Most of the time taking only 4% meant at the end of your days you left buckets of money on the table for your (all too often ungrateful) heirs This is how I always understood the 4 % rule: the portfolio remained intact. So the strategy should work over 40 years, also. Aug 5, 2022 at 22:12
  • @puzzled Use the comment system to ask for clarifications. Do not edit the answer to add your additional questions.
    – Flux
    Aug 7, 2022 at 20:39
  • @dugan please clarify if not run out of money 96% of the time means balance will not become negative or it means balance will not decrease less than money started"
    – puzzled
    Aug 7, 2022 at 22:54
  • @puzzled "not run out of money 96% of the time" means that the balance does not drop below 0 in 96% of the iterations examined. This can be seen in the link to the online calculator I included in my answer.
    – Dugan
    Aug 8, 2022 at 15:03
  • @dugan thanks for clarification
    – puzzled
    Aug 9, 2022 at 2:37

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