How big does the pot need to be?
Start from what you spend in a year, not from a round number someone else picked.
Everything: rent or mortgage, food, bills, holidays.
The share of the pot you would take each year. 4% is the common rule of thumb, and it is only that.
More options(5)
To draw $30,000 a year at 4%
$750,000
That is 25 times what you spend in a year — which is all the 4% rule of thumb ever says. Saving $700 a month on top of the $20,000 you have, and assuming returns average 7% a year, you would get there in 26 years 9 months. At 4% it takes 36 years 2 months; at 10%, 21 years 7 months.
- The pot you need
- $750,000
- Years of spending
- 25×
- Time to get there
- 26 years 9 months
The target line sits at $750,000. Reaching it is the easier half of the problem — how long the pot then lasts depends on what markets do in the years right after you stop adding to it.
If returns average…
Nobody knows which of these happens
| Assumption | Time to reach it |
|---|---|
| 4% a year — cautious | 36 years 2 months |
| 7% a year — middle | 26 years 9 months |
| 10% a year — optimistic | 21 years 7 months |
Markets do not return the same amount every year. The band shows the same plan under three different assumptions, so you can see how much the answer depends on a number nobody knows.
Start from spending, not from a round number
"A million" is a number people arrive at because it sounds like enough, not because it corresponds to anything. The pot you need is a function of what you spend, and two people with identical salaries can need pots that differ by a factor of two.
So the input that matters here is the first one: what a year actually costs you, including the things that do not feel like spending. Get that wrong and every other figure on the page is decorative.
Where "25 times" comes from
Divide by 4% and you multiply by 25. That is the whole of the arithmetic behind the rule of thumb you have probably seen. The 4% itself traces back to studies of historical US market data asking what withdrawal rate would have survived a thirty-year retirement in the worst historical starting years.
Which means it carries a lot of baggage worth knowing about:
- It was derived from one country's market history, over one particular period.
- It was tested against a thirty-year retirement. Retiring early makes the horizon much longer.
- It assumed a particular mix of shares and bonds, and it assumed you rebalance.
- It ignores fees, which come straight off the sustainable rate.
- It says nothing about tax, and nothing about a state or workplace pension arriving later.
The slider on this page lets you move the withdrawal rate for exactly that reason. Watch what happens to the target as you go from 4% to 3% — the pot needed jumps by a third. That sensitivity is the point.
Building it is the easy half
Reaching a number is arithmetic. Living off it is not, because once you stop contributing and start withdrawing, the order of returns starts to matter enormously. A poor first few years forces you to sell more units at low prices, and the pot can fail even if the long-run average return was perfectly respectable.
The drawdown calculator shows the spending side, including the part where your withdrawal has to rise every year just to buy the same groceries.
Common questions
Should I use 4%?
Does the target account for inflation?
What about a state pension or workplace pension?
Not advice. This tool applies arithmetic to assumptions you entered. It does not know your circumstances, your tax position or your goals, and it is not a recommendation to buy, sell or hold anything. Past returns do not predict future ones, and no figure here is a forecast.