# The Money Mustache Community

## Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: reese_c_c on May 31, 2018, 09:50:17 AM

Title: Trying to understand the 4% rule...
Post by: reese_c_c on May 31, 2018, 09:50:17 AM
When testing the waters of "how much I need to retire", the 4% rule keeps coming into play, however I'm not sure I'm following how this works.

My basic understanding is to take the amount you want to withdraw every year (i.e \$30,000) and then divide by 4% = \$750,000. Is this telling me that once I have \$750,000 of available money invested smartly in the market, I can retire? And is this an "infinite" retirement? Say if I retire at 35 with \$750,000 of available money I can never work again until I die?

Just trying to get a little more layman's clarity around this. Thanks
Title: Re: Trying to understand the 4% rule...
Post by: ingrownstudentloans on May 31, 2018, 09:52:03 AM
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/

I don't think I could do it better than Pete does in his articles...
Title: Re: Trying to understand the 4% rule...
Post by: TheAnonOne on May 31, 2018, 10:48:14 AM
When testing the waters of "how much I need to retire", the 4% rule keeps coming into play, however I'm not sure I'm following how this works.

My basic understanding is to take the amount you want to withdraw every year (i.e \$30,000) and then divide by 4% = \$750,000. Is this telling me that once I have \$750,000 of available money invested smartly in the market, I can retire? And is this an "infinite" retirement? Say if I retire at 35 with \$750,000 of available money I can never work again until I die?

Just trying to get a little more layman's clarity around this. Thanks