The 4% rule states that retirees can withdraw 4% of their portfolio in year one, then adjust for inflation each year, with a high probability the money lasts 30 years. It originated from the 1994 “Trinity Study.” For longer retirements (40+ years), many planners now suggest 3–3.5% to be safer. Your actual safe rate depends on asset allocation, sequence-of-returns risk, and flexibility.

Inflation erodes purchasing power. If you withdraw $4,000/month today at 3% inflation, you’ll need $5,375/month in 10 years to maintain the same lifestyle. That’s why the real (inflation-adjusted) return — not just the nominal return — is what matters for retirement planning. A 6% portfolio return with 3% inflation gives a real return of ~3%.