💰Your simple retirement spending guide

read time 2 minutes

Hi there,

Imagine this: you’ve worked hard, built a nest egg and are now ready to retire. But you’re asking, “How much can I safely spend each year without outliving my money?” That’s where the 4% Rule comes in.

The 4% rule is a guideline that says: in your first year of retirement, withdraw about 4% of your total savings. Then, each year after, adjust that amount for inflation. The idea? Your savings stand a high chance of lasting 30 years or more.

For example, if you retire with $1 million, you’d pull out $40,000 in year one. If inflation is 2%, next year you’d withdraw $40,800, and so on.

How it works:

1. Add up your retirement savings. Include your investment accounts, pensions, etc.
2. Multiply by 4%. That gives your first year’s budget (for example: $1 million × 4% = $40,000).
3. Each subsequent year: increase that dollar amount by the inflation rate (say 2%, 3%) to keep pace with rising costs.
4. Check your portfolio. Make sure your investments are balanced (stocks + bonds) and you revisit your withdrawal plan if things change.
5. Use it as a starting point. This isn’t set in stone. Your lifestyle, health expenses, market returns or other income may mean you need to adjust.

It matters because it gives you a simple, disciplined way to budget your retirement spending and helps you avoid draining your savings too fast.

But it comes with exceptions:

• It assumes a balanced portfolio (e.g., 50% stocks / 50% bonds).
• It uses historic market returns. Things like low-interest rates or high inflation today might change how safe 4% really is.
• Your personal spending, unexpected costs (health, home repairs), or longer life expectancy might mean you need to adjust downward.

Use the 4% Rule as your guided baseline, not a rigid law. It’s a strong tool to kick-start your retirement planning, showing you how much you could spend and helping you freeze that fear of “will my money last?”

Learn more about making and multiplying your wealth in my step-by-step guide to making your first $100K here. 

Using my affiliate link helps support my team and I to create new content for you every week. Thank you! 

- Milan and Team

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