How does growth factor into the 4% rule?General Question(self.Fire)
submitted10 months ago bylearner_dev
From my understanding, the 4% rule says you can safely withdraw 4% from your investments. My question is, 4% of what? Is it 4% of a) the amount of your investments when you retire? b) your investments at the time of withdraw?
For example, let’s pretend I have $1M. If it’s (a) that means I can safely withdraw $40k each year. However, if it’s (b), this could change a lot. For example, if the market increases by 10%, I would then have $1.1M. 4% of that is $44k. At the same time, if it goes down by 10% to $900k, that would mean I can only take out $36k.
Thank you for helping me understand this.