4 percent vs 3 percent SWR
A FIRE number is annual spending divided by the withdrawal rate. $60,000 a year at 4 percent is a $1,500,000 pile. At 3 percent it is $2,000,000. From $50,000 saved plus $25,000 a year at 7 percent, those piles are 22.43 and 25.95 years away.
| 4 percent SWR | 3 percent SWR | |
|---|---|---|
| Multiple | 1 / 0.04 = 25 times spending. | 1 / 0.03 is about 33.3 times spending. |
| Pile for \$60,000 | $1,500,000. | $2,000,000. |
| Gap from \$50,000 saved | $1,450,000. | $1,950,000. |
| Wait at \$25,000 a year, 7 percent | 22.43 years. | 25.95 years. |
| What the rate is | A research finding about a historical sample of US stock and bond returns, not a law of arithmetic. | A thicker cushion, and a claim that 4 percent is more than this reader will withdraw. |
| What neither knows | Sequence of returns. Two piles of $1,500,000 that earn 7 percent on average can last very different lengths of time. | The same sequence risk, on a larger pile. |
On this page
The rate and the multiple are the same fact
If you plan to withdraw 4 percent of a pile in the first year, the pile has to be 25 times that spending. $60,000 wants $1,500,000. A 3 percent withdrawal wants about 33.3 times spending, which is $2,000,000. The withdrawal rate and the multiple are one identity written two ways.
From $50,000 already saved, adding $25,000 a year at 7 percent, the 4 percent pile is 22.43 years away and the 3 percent pile is 25.95 years away. The saving path did not change. The target did.
The FIRE number calculator applies whichever rate you type. How FIRE numbers work is that identity. Safe withdrawal rates is the page that treats 4 percent as a claim about history rather than as a formula. The FIRE number explorer holds spending still and lets you drag the rate: a lower rate is a thicker pile.
A lower rate is not a safer calculator
Typing 3 percent because 4 percent feels high is a thicker pile on this sheet, and a longer wait. It is not a proof that 3 percent lasts. Sequence of returns sits beside this identity and is not inside it. The sequence of returns explorer is that picture.
Raising the assumed return cuts the wait on both rates, and it is the lever a reader does not control. Drawdown is what a bad sequence does to a pile that looked large enough on an average return. This is educational material, not financial advice.
Worked examples
\$60,000 a year at 4 percent, from \$50,000 plus \$25,000 a year
Spending in retirement is $60,000 a year. The withdrawal rate is 4 percent. You have $50,000 saved and add $25,000 a year at 7 percent. What is the FIRE number, and how long is the wait?
- FIRE number: , so $1,500,000.
- Gap from what is saved now: .
- Years: .
The FIRE number is $1,500,000, a gap of $1,450,000 from the $50,000 already saved. At $25,000 a year and 7 percent, the wait is 22.43 years.
The same spending at 3 percent
Keep spending at $60,000, savings at $50,000, adding $25,000 a year at 7 percent. The withdrawal rate is now 3 percent. What is the FIRE number, and how long is the wait?
- FIRE number: , so $2,000,000.
- Gap from what is saved now: .
- Years on the same saving path: 25.95.
The FIRE number is $2,000,000, a gap of $1,950,000 from the $50,000 already saved. At $25,000 a year and 7 percent, the wait is 25.95 years.
Common questions
Is 4 percent a guarantee?
No. It is a finding about a historical sample. This page will apply 4 percent or 3 percent as arithmetic. It will not tell you the rate is safe.
Why does 3 percent take longer if I am withdrawing less?
Because the pile has to be larger before you start. The saving path is the same. The target moved from $1,500,000 to $2,000,000.
Should I type 5 percent to finish sooner?
The formula will apply 5 percent. A thinner pile and a shorter wait on the screen is a different claim about the world, not a better calculator.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.