Safe Withdrawal Rate
The percentage of a portfolio that can be spent annually with low depletion risk.
What is Safe Withdrawal Rate?
The '4% rule' from the Bengen and Trinity studies: withdraw 4% of the initial balance, adjust for inflation, and historically the portfolio lasted 30 years. It is a research finding under specific assumptions, not a guarantee - low starting yields, longer retirements, and fees all pressure it.
Safe Withdrawal Rate: a worked example
$1,000,000 supports about $40,000 in year one, rising with inflation thereafter.
More terms in Planning, Insurance & Estate
Emergency Fund
Liquid reserves covering several months of essential expenses.
Net Worth
Total assets minus total liabilities.
Term Life Insurance
Pure death benefit for a fixed period, no cash value.
Whole Life Insurance
Permanent coverage with a guaranteed cash value component.
Disability Insurance
Income replacement if illness or injury prevents you from working.
Long-Term Care Insurance
Covers extended custodial care that health insurance and Medicare do not.
Will vs. Revocable Trust
Directs assets through probate versus holding them outside probate.
Beneficiary Designation
Account-level instructions that override the will.