The 4% Assumption in a Coast FIRE Calculator
By Retire Growth · Updated 2026-10-27 · No independent professional financial review is claimed.
A withdrawal-rate shortcut sizes a target; it cannot certify a retirement plan.
In the Coast FIRE calculator, the withdrawal percentage is a target-sizing input. Annual spending divided by that percentage gives a portfolio target. The default is 4%, but it is editable and is not a recommendation for your circumstances.
Where the idea comes from
William Bengen's October 1994 research examined withdrawals using historical investment and inflation data. The Financial Planning Association reprinted the paper in 2004. That history is useful context for the phrase “4% rule,” but a historical result and a forward-looking personal plan are different things.
In his own explanation, Bengen describes the original research and later changes to his work. Later research does not turn any one percentage into a universal answer. The portfolio, assumptions and retirement period matter.
Initial rate is not a yearly reset
The historical framework starts with a percentage of the initial portfolio and then adjusts the withdrawal amount for inflation. That differs from taking the same percentage of the current balance each year. The latter makes income vary with portfolio value.
Our calculator does neither withdrawal simulation. It only uses the selected percentage to size the target before retirement. It does not backtest assets, run Monte Carlo trials or estimate a success probability.
Small percentage changes create large target changes
Consider an illustrative annual spending need of $48,000. At a 4% input, the target is $1,200,000. At 3%, the same spending implies $1,600,000. Both are arithmetic outputs. Neither number establishes a sustainable strategy.
The Coast number then discounts that target by your remaining years of assumed real growth. A larger target increases the amount needed today, even if the expected investment return and retirement date remain unchanged.
Early retirement adds questions
A longer withdrawal period may include more opportunities for poor returns, changing costs or unexpected spending. A smooth accumulation chart does not evaluate those risks. Sequence-of-returns risk concerns the order of gains and losses when money is being withdrawn, which this tool does not simulate.
Taxes, account access restrictions and benefit start dates can also affect how a portfolio funds spending. They require analysis outside this calculator.
How to use the input here
Explore several withdrawal-rate assumptions alongside different spending and growth scenarios. Keep the result attached to the assumptions rather than treating a single green line as a promise. A qualified professional can help evaluate the questions this educational model leaves open.
The Coast FIRE calculator shows each selected assumption in its results, CSV and printout. The methodology defines every formula. Read Coast versus Full FIRE to see why a Coast milestone is not an immediate retirement balance.
Updated October 27, 2026. Educational content; no independent professional financial review is claimed.