[USER]

Does the 4% withdrawal rule mean that your principal amount will remain untouched because the growth on your principal will be 4% as well?

The 4% rule is a popular retirement withdrawal strategy, suggesting that withdrawing 4% of your portfolio annually should make your savings last for at least 30 years.

However, does this rule truly ensure that your principal remains untouched over time? Or is there a risk that market fluctuations, inflation, or unexpected expenses could erode the original investment?

I’m curious to hear your thoughts and experiences—have you followed the 4% rule, and if so, how has your principal held up?

[David]

If it’s invested in a hysa that gets 4% it will remain the same. However the value of the money will decrease over time but essentially that’s meaningless because at the end of the use of the money you’ve passed away

[Keith]

4% withdrawal rule is very conservative. 96% of the time after 30 years you will still have 100% of principle.

66% of the time your principle will have doubled after 30 years.

[Bassel]

This is a very general rule. Success will be highly dependent on the investment returns in the early years.

If the first few are down markets, it really erodes the base.

[Darrin]

It essentially means that, with a 60/40 portfolio, considering all historical inflation and market gains over every 30 year time periods that have been tracked, a portfolio would (barely) last 30 years taking an initial draw of 4% and increasing it *by inflation* every year.

It’s just a general rule of thumb, but Real life implementation would be extremely difficult due to unexpected expenses, and I would not use 4% given today’s future expected market returns.

[John]

Annual returns will never be consistent. Some years you’ll make much more than 4% return. Other years you’ll make less, even negative.

The 4% rule of thumb is a best guess estimate that will likely make your money last for 30 years given historical rates of return analyzed over many decades.

[Jennifer]

The market doesn’t go up 4% every year. Some years it goes up 25%. Some years it goes down 25%.

The 4% rule says that if you withdraw 4% in year 1 and increase it by inflation every year, you’re very very likely to be ok for 30 years.

[Author]

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