Safe withdrawal rate for early retirement: 40 and 50 year horizons
Short answer: For a 40 to 50 year retirement, 3.5% of the starting portfolio (adjusted for inflation) lasted in 98% or more of US start years since 1871 with all stocks, while 4% lasted 90% to 94% of the time. A 3% rate never ran out.
Retiring at 40 or 45 means your money may need to last 50 years or more, longer than the 30-year retirements behind the 4% rule. Here is how fixed, inflation-adjusted withdrawals held up over longer horizons in every US start year since 1871.
| Withdrawal rate | FIRE number per $40k of spending | 40 years lasted | 50 years lasted |
|---|---|---|---|
| 3.0% | $1.33M | 100% | 100% |
| 3.5% | $1.14M | 100% | 98% |
| 4.0% | $1.00M | 94% | 90% |
| 4.5% | $889k | 80% | 75% |
| 5.0% | $800k | 71% | 67% |
All stocks, real dollars, no fees or taxes. Your FIRE number is yearly spending divided by the withdrawal rate: 4% is 25 times spending, 3.5% is about 28.6 times, 3% is about 33.3 times.
Choosing a rate
- 3% to 3.5% if your spending can't fall and you have no other income for decades.
- 4% if you could cut spending in a bad decade, expect Social Security later, or might earn some income.
- Higher, with a variable rule, if your spending can move with markets. See variable withdrawal rules.
Social Security, a paid-off home, part-time work and health insurance costs all change the answer. The Workspace includes each of them, and the Journey lets you choose a 20 to 40 year test and download a PDF packet of the results.
Questions
What is a safe withdrawal rate if I retire at 40?
Historically, 3.5% lasted 50 years in 98% of US start years since 1871 with all stocks, and 3% in all of them. 4% lasted 90% of the time.
How do I calculate my FIRE number?
Divide your yearly spending by your withdrawal rate. At 4% that is 25 times spending; at 3.5%, about 28.6 times; at 3%, about 33.3 times.