The 4% rule is designed to make retirement savings last for 30 years, assuming you withdraw 4% in the first year and adjust that amount for inflation annually, using a balanced 50/50 stock/bond portfolio. However, its actual longevity depends on market performance, asset allocation, your actual retirement length (especially if you retire early or live very long), and your specific spending habits, so it serves as a guideline, not a guarantee.
While it's not guaranteed, multiple studies show that if you follow the 4% rule, your retirement savings should last for at least 30 years. Of course, there's always a chance that you will live longer than 30 years after your retirement.
The 4% rule assumes that your portfolio has a relatively even mix of stocks and bonds. But if you're extremely risk-averse, you may have little to no money invested in the stock market as a retiree. If that's the case, you may want to stick to a lower withdrawal rate than 4%.
Your $500,000 can give you about $20,000 each year using the 4% rule, and it could last over 30 years. The Bureau of Labor Statistics shows retirees spend around $54,000 yearly. Smart investments can make your savings last longer.
Roughly 7% to 9% of American households have $500,000 or more in retirement savings, though figures vary slightly by source, with data from late 2025 suggesting around 7.2% and older 2022 data indicating about 9%, showing it's a significant milestone achieved by less than one in ten families, despite higher averages driven by wealthy individuals.
Key Takeaways
It grew out of historical U.S. market research showing that a 4% starting withdrawal often survived 30-year retirements. But today's retirees face longer lifespans, higher healthcare costs, and a shakier return outlook than the generations that rule was built for.
To maximize savings and investments, you might have to work until you're 67 or longer. Or maybe you should quit when you're 62 and still healthy and active. If getting Medicare means everything to you, 65 is a good age to consider.
The safety of a 4 percent initial withdrawal strategy depends on asset return assumptions. Using historical averages to guide simulations for failure rates for retirees spending an inflation- adjusted 4 percent of retirement date assets over 30 years results in an estimated failure rate of about 6 percent.
Only a small percentage of Americans retire with $1 million or more in retirement savings, with figures from the Federal Reserve and Employee Benefit Research Institute (EBRI) showing around 3.2% of retirees hitting that mark, though some sources cite slightly lower numbers for all Americans (around 2.5%) or higher estimates for households nearing retirement (over 10% of older households have $1M+ net worth, not just retirement funds). The reality is most retirees have significantly less, with the median for ages 65-74 being around $200,000-$609,000 in retirement accounts.
You're retiring early
If you're in great health and have a family history of longevity, you may end up living well into your 90s. But in that case, you may need to get more than 30 years out of your savings, making a 4% withdrawal rate a bit too aggressive.
If you've made it to retirement, or 65 years old, you're likely to live past 77—all the way to 84 for men and 86 for women. And fifty percent of people will live longer than that. We're living longer and longer, even if many of us don't realize it.
One in five Americans over the age of 50 have no retirement savings, according to a survey by the AARP. And even if you have something tucked away, it may not be enough — though that is something you can change even late in the game.
Even if you're planning a lavish retirement lifestyle, $4 million will successfully fund your retirement. $4 million will last a long time in retirement and could even mean you could retire early. Your tax bracket and how much you pay should also be considered when planning how much money you'll need for retirement.
Empower Personal DashboardTM data shows 9.1% of people fall into the category of 401(k) millionaire as of September 30, 2025, having accumulated at least $1 million in retirement savings in employer-sponsored plans and individually controlled IRA savings and investment accounts.
Recommended retirement savings generally follow a guideline of having your savings equal to your annual salary by age 30, three times by 40, six times by 50, eight times by 60, and ten times your salary by age 67, though exact figures vary by institution, with percentages of income (10-20%) also suggested, and catch-up contributions available for older savers. These benchmarks help you track progress towards a goal of 10-12 times your final salary by retirement.
In the organisation's super balance update, it found 2.5 per cent of the population have a super account of more than $1 million, as of June 2021. This represents 417,567 individuals, ASFA said, and is a 29 per cent increase from the 322,200 individuals who held over $1 million in June 2019.
The Super Consumers Australia guide
It assumes you'll own your home and won't be paying rent or mortgage repayments once you've retired. The guide estimates a 'medium' lifestyle will cost a couple who are already retired about $60,000 per year (with a required super balance at retirement of $371,000).