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Safe Withdrawal Rate Formula:
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The Retire At 60 Calculator helps determine a sustainable monthly withdrawal amount from retirement savings using the 4% safe withdrawal rule, which is a widely accepted guideline for retirement planning.
The calculator uses the safe withdrawal rate formula:
Where:
Explanation: The 4% rule suggests that withdrawing 4% of your retirement portfolio annually provides a high probability that your savings will last for 30 years of retirement.
Details: Using a sustainable withdrawal rate is crucial for ensuring retirement funds last throughout your lifetime and helping prevent outliving your savings.
Tips: Enter your total retirement savings in dollars. The calculator will compute your safe monthly withdrawal amount based on the 4% rule.
Q1: Why use the 4% withdrawal rate?
A: The 4% rule is based on historical market data showing this rate has a high success rate for making retirement savings last 30 years.
Q2: Is the 4% rule guaranteed?
A: No, it's a guideline based on historical averages. Actual results may vary depending on market conditions and individual circumstances.
Q3: Should I adjust for inflation?
A: Yes, the traditional 4% rule includes annual inflation adjustments to maintain purchasing power.
Q4: Does this work for early retirement?
A: For retirement periods longer than 30 years, a lower withdrawal rate (3-3.5%) may be more appropriate.
Q5: What about other income sources?
A: This calculation assumes withdrawals are your primary income. Social Security, pensions, or other income should be considered in your overall retirement plan.