The 4% Rule
A retirement guideline that withdrawing 4% of your starting portfolio (then adjusting for inflation) historically lasted at least 30 years.
The 4% rule is a shorthand for a safe withdrawal rate. It says you can withdraw 4% of your portfolio's value in your first year of retirement, increase that dollar amount with inflation each year afterward, and have historically avoided running out of money over a 30-year retirement. It's the origin of the popular 25x FI Number (since 1 divided by 4% equals 25).
It came from the Trinity Study and related research using historical U.S. stock and bond returns. As a rule of thumb it's useful for setting a target, but it has real limits: it assumes a 30-year horizon, a specific asset mix, and that the future resembles the past. Early retirees planning for 40 to 50 years often treat it as a ceiling rather than a default.
Treat it as a planning starting point, not a spending mandate. Real retirements involve variable spending, taxes, Social Security starting partway through, and the option to adjust when markets disappoint.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.