The Trinity study's 4% "safe withdrawal rate" is actually a bit technical: The amount you withdraw from your portfolio, in perpetuity is: "4% of your portfoli

The Trinity study's 4% "safe withdrawal rate" is actually a bit technical: The amount you withdraw from your portfolio, in perpetuity is: "4% of your portfolio's value on the day you retire, adjusting annually for inflation." Say, on the day you retire, your portfolio's value is $100,000. For the next thirty years, you withdraw $4,000 annually (adjusted for inflation). You now have $96,000 in your portfolio. Say the year after you retire, your portfolio has done supremely well, and doubled in value to $192,000, and inflation has been 0%. You get to withdraw: $4,000. You now have $188,000 in your porfoloio. The next year, your portfolio tanks by 50%, and it is now worth $ $94,000 (and inflation is still 0%). You get to withdraw: $4,000. Your portfolio is now worth $90,000. (There are additional rules about the composition of the portfolio too.) ----------- Historically, by following this rule, there has been no thirty-year period (since records of the US Stock market have been kept) where the portfolio would fail--where you wouldn't be able to withdraw your $4,000. And the vast majority of the time, you would end up with a very, very much larger value. It is a fairly conservative system and keeps purchasing power constant, which is useful. But it is only a starting point. If you will have a longer retirement, don't follow their composition rules, or don't need constant purchasing power (most retirees don't), then you should adjust it as appropriate.