What this comparison means
The classic 4% rule multiplies your portfolio by 4% and treats that as a first-year withdrawal (often then adjusted for inflation). It is a research-inspired rule of thumb — not a calculation that knows your retirement length, expected real return, or Social Security.
Sustainable spending on this page uses the same annuity-real solver as How Much Can I Spend in Retirement?: solve for a constant purchasing-power portfolio withdrawal through your plan-through age under the return and inflation you enter, then add optional outside income. That is still a fixed-assumption estimate — not Monte Carlo success and not a guarantee.
When the two disagree, the gap is the story. A long horizon with modest real returns can make 4% look aggressive; a shorter horizon or higher assumed real return can make 4% look conservative. Outside income raises both totals equally, so the gap is driven by the portfolio piece.
Where the 4% rule comes from (and where it stops)
Popular “4%” discussions trace to historical withdrawal studies on diversified portfolios over long retirements. Those studies answer a different question than “what does my spreadsheet say under these assumptions?” They also do not replace stress-testing against bad early markets — sequence risk can matter even when a fixed 4% looks fine on a smooth return path.
This page deliberately shows 3% and 5% as context. Rules of thumb are a range, not a commandment.
How the sustainable side is calculated
We call the planner’s Spending Capacity annuity-real path for the years from retirement to your plan-through age. Details live in Spending Capacity methodology. Markets are not randomized here; for that, use Monte Carlo or Historical with a candidate spend.
How this page differs from our other free tools
- Spending Capacity — deep dive on sustainable spend without leading with the 4% rule.
- Money Longevity — fix spending, solve for depletion age.
- Market tools — test whether a chosen spend survives random or historical sequences.
Important limitations
No taxes, no RMDs, no account location. Fixed returns are not real markets. Educational comparison only — not advice. Explore Jim & Susan’s sample plan or build a free plan to replace shortcuts with your accounts.