The 4% Rule: How Much Can You Withdraw in Retirement?
After decades of saving, you face a new question: how much can you safely withdraw each year without running out? The most famous answer is the 4% rule.
Here's how it works, what it means for your monthly income, and whether it still holds up.
What Is the 4% Rule?
The 4% rule says: in your first year of retirement, withdraw 4% of your balance, then adjust that amount for inflation every year after. Done right, your money should last at least 30 years.
It's simple, but it's built on decades of market history — and it gives you a concrete monthly income number.
Your Monthly Income, by Balance
| Retirement balance | 4% annual withdrawal | Monthly income |
|---|---|---|
| 1,000,000 riyals | 40,000 | 3,333 |
| 1,500,000 riyals | 60,000 | 5,000 |
| 2,000,000 riyals | 80,000 | 6,667 |
| 3,000,000 riyals | 120,000 | 10,000 |
💡 See your own number: Use the retirement calculator — it applies the 4% rule to your projected balance and shows your estimated monthly income.
The 4% Rule in Reverse
Flip the 4% rule and you get the 25x rule for how much to save: to withdraw 4% safely, you need 25× your annual spending.
If you want 10,000 riyals a month (120,000 a year), you need about 3 million riyals saved.
Is the 4% Rule Still Safe?
The 4% rule is a guideline, not a guarantee. Two things have changed since it was popularized:
- Lower expected returns — many analysts now assume lower long-term stock and bond returns than the rule's original data.
- Longer retirements — a 40-year retirement needs a lower withdrawal rate than a 30-year one.
That's why many planners now recommend 3%–3.5% for early retirees. But for a classic retirement at 60–65, 4% remains a reasonable starting point.
Frequently Asked Questions
Is the 4% rule before or after inflation? It's designed to be adjusted for inflation. You withdraw 4% in year one, then increase that amount by inflation each year — not 4% of your balance each time.
What happens if the market drops in my first year of retirement? This is the biggest risk. A bad first year can derail the plan. Some retirees use a more conservative 3.5% or keep a cash cushion to avoid selling during a downturn.
Does the 4% rule include fees and taxes? No — the withdrawal amount includes everything, so subtract fees, taxes and any other costs from your 4%.
Project your retirement income with the RateLedger retirement calculator.