Retirement
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Two questions decide most retirement math: what will your savings grow to, and how much yearly income can that pot safely pay? This answers both — projection plus the 4% rule — as you type.
The two halves of retirement math
First, accumulation: your current balance plus monthly contributions, compounding at your assumed return until retirement day. Second, withdrawal: turning that pot into income that lasts. The most-cited guide for the second half is the 4% rule.
Where the rule comes from
It stems from the "Trinity study" research on historical US portfolios: withdrawing 4% of the starting balance, adjusted for inflation each year, survived essentially every 30-year period tested. The FIRE movement flips it into a target — 25 times your annual spending is the classic "number".
The honest caveats
The 4% rule is a planning guide, not a guarantee: it's based on US history, assumes a balanced portfolio, and 30-year horizons — earlier retirees and cautious planners often use 3–3.5%. Returns here are nominal, so at ~3% inflation, think of a 7% input as roughly 4% in today's purchasing power. For the growth mechanics alone, see the compound interest calculator; for what markets actually delivered, the S&P 500 record.
Retirement / FIRE FAQ
A retirement guideline: withdraw 4% of your starting balance in year one, then adjust for inflation annually. In historical US testing this survived essentially every 30-year retirement — equivalently, aim for savings of about 25 times annual spending.
A common starting estimate is 25 times your planned yearly spending — the 4% rule inverted. Spending $40,000 a year implies roughly a $1 million pot. Personal factors (pensions, home, health, retirement age) shift the real number.
Long-run diversified stock portfolios have returned roughly 7–10% nominal, about 4–7% after inflation. Using 6–7% nominal is a common middle-ground planning assumption; lower is more conservative.
It was tested on 30-year horizons. For 40–50-year FIRE timelines, many planners drop to 3–3.5% withdrawals, which raises the savings target to roughly 29–33 times spending.