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Monthly Income by Withdrawal Rate
| Rate | Monthly Income | Annual Income | Portfolio Lasts |
|---|---|---|---|
| Click Calculate | |||
What Is a Safe Withdrawal Rate?
A safe withdrawal rate (SWR) is the percentage of your portfolio you can withdraw each year in retirement without running out of money. The most widely cited rate is 4% (from the Trinity Study), but many FIRE practitioners use lower rates — especially if retiring very early.
Which Rate Should You Use?
3% — Very conservative: Suited to very long retirements (40+ years) or investors with high uncertainty about future returns. Virtually never fails historically.
3.5% — Conservative: A good choice for South Africans retiring in their 40s. Gives extra cushion for rand volatility and local inflation.
4% — Standard: The Trinity Study result. Works well for 30-year retirements in most historical scenarios.
4.5–5% — Aggressive: Only suitable for shorter retirements or investors with other income sources (property rental, side income, etc.)
South African Considerations
South Africa has historically had higher inflation than the US (typically 5–7% vs 2–3%). This means your withdrawals need to increase faster each year to maintain purchasing power. Using a lower withdrawal rate (3–3.5%) and investing a significant portion offshore provides a natural inflation hedge through currency exposure.
Frequently Asked Questions
Yes — the original Trinity Study assumed you increase your withdrawal by inflation each year. So in year one you withdraw 4%, and each subsequent year you adjust upward by CPI. In South Africa, this means your withdrawals grow at roughly 5–7% per year.
Nominal return is the headline number (e.g., 10%). Real return subtracts inflation (e.g., 10% - 6% inflation = 4% real). When calculating how long your money lasts, always use real return to account for inflation's impact on purchasing power.
Yes — rental income, part-time work, or a pension reduces your dependency on your portfolio. Many FIRE practitioners use a 'flexible' withdrawal strategy: withdraw less in down markets and more in good years.