The 4% rule states that you can withdraw 4% of your portfolio in the first year of retirement and adjust for inflation each year, with a high probability your money will last 30 years.

Does the 4% rule work in India?

The principle applies, but India has higher inflation (6–7%) than the US. Many use 3–3.5% as a safer withdrawal rate, or 30x expenses instead of 25x.

What is a safe withdrawal rate?

A safe withdrawal rate (SWR) is the percentage of your portfolio you can withdraw annually without running out of money. 4% is common; 3–3.5% is more conservative.

The 4% Rule Explained

The 4% rule is one of the most cited guidelines in FIRE and retirement planning. It states: withdraw 4% of your portfolio in your first year of retirement, then adjust that amount for inflation each year. Historically, this strategy had a high success rate over 30-year periods.

Origins: The Trinity Study

The rule comes from the Trinity Study (1998), which tested various withdrawal rates against US stock and bond returns. A 4% safe withdrawal rate (SWR) with a 50–75% equity allocation succeeded in most historical scenarios.

How It Works

If you need ₹12 lakh per year in retirement, you need a corpus of ₹3 crore (12 lakh ÷ 0.04 = 3 crore). In year 1, you withdraw ₹12 lakh. In year 2, you increase the withdrawal by inflation—say 6%—to ₹12.72 lakh, and so on.

Use Our Withdrawal Rate Calculator

Stress-test different withdrawal rates and portfolio assumptions with our calculator:

Safe Withdrawal Rate Calculator

See how much you can safely withdraw from your corpus each year (4% rule and variants).

Caveats for India

Higher inflation: India's inflation (6–7%) is higher than the US. Some use 3–3.5% SWR.
Sequence of returns risk: Poor returns in early retirement can deplete your corpus. See sequence of returns risk.
Longevity: If you retire at 40, 30 years may not be enough. Plan for 40+ years.

Alternatives to 4%

Dynamic withdrawal strategies (e.g., reduce spending in down years) can improve success rates. The 4% rule is a starting point—adjust based on your risk tolerance and Indian context.