4 % rule
A rule of thumb that you can spend 4 % of your savings in year one and adjust for inflation, and the money has historically lasted 30 years.
It comes from studies of US stock and bond returns in the 1990s. It is a starting point, not a law. Swiss investors face different returns, currency effects and longer horizons when they retire early.
Tools that use it
Related terms
- Safe withdrawal rateThe share of your savings you can spend in the first year of retirement, then adjust for inflation, without running out.
- Sequence-of-returns riskThe risk that bad market years early in retirement do lasting damage, because you sell investments at low prices to live.
- Monte Carlo simulationRunning a plan thousands of times with random market returns to see how often it succeeds.
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The numbers
The 4% rule, and why 3.5% is safer for Swiss early retirees
The 4% rule comes from US data over 30 years. Early retirees need longer horizons, so 3.5% is the safer start. What the rule says and what it does not.