Anchor your retirement spending with the 4% rule

When Robert closed his laptop on his final day of work, he felt equal parts relief and dread. He’d invested wisely for years, but now the question loomed: how much could he safely spend? His savings bytes blurred together in spreadsheets.

Then he learned about the 4% rule—withdraw 4% of your portfolio annually, adjusted for inflation, and you’ll survive four decades in most historical market scenarios. He calculated his living costs and realized he needed about $40,000 a year, which meant a $1 million nest egg.

Putting the math aside, Robert set up quarterly transfers of 1% from his investment account to checking. In a bad market year, he scaled back to 0.9%, and in booming years he took a 1.1% slice. Studies confirm this small flexibility keeps you on track nearly 100% of the time. Now each withdrawal feels intentional, not fearful.

You’ll total your annual expenses and multiply by 25 to set your nest-egg target. Arrange automated transfers—monthly or quarterly—for one-quarter of your 4% annual draw. Each year, review your balances. Cut back spending slightly in tough times, and restore it when markets rebound. This dynamic yet disciplined approach anchors your retirement spending and protects against sequence-of-returns risk—give it a try this quarter.