What withdrawal rate should I use?
We call your starting withdrawal rate your Burn Rate: the percentage of your starting Freedom Fund you plan to use to support the first year of your retired life.
This tool asks six questions to help you explore whether a starting Burn Rate nearer 4%, 4.5% or 5% fits the flexibility and promises in your plan. The purpose is to give you a burn rate that you can use to predict future income and use in the Freedom Calculator (link below)
There are no gold stars for 5%. Choose the Burn Rate that fits the life you would actually live.
A Rebel Finance School tool
Find your starting Burn Rate
Answer six questions to explore whether your starting Burn Rate sits nearer 4%, 4.5% or 5%. You will see the trade-offs, the promises behind the result and what size Freedom Fund it suggests.
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What does my Burn Rate result mean?
Your result is a starting withdrawal rate to explore, not a verdict or a guarantee. A lower Burn Rate asks for a larger starting Freedom Fund. A higher Burn Rate creates a smaller starting target and supports more spending from each pound invested, but it usually asks for more flexibility, more regular review and a greater willingness to respond when markets or life change.
Your Burn Rate is not a permanent autopilot setting. Review the plan regularly and update it when your spending, reliable income, investments or life change.
What do 4%, 4.5% and 5% mean?
4% Robust Burn Rate
Approximately 25 times the annual spending your investments need to provide. It starts with the largest Freedom Fund of the three and gives the plan more room when markets or life do not go as hoped.
4.5% Balanced Burn Rate
Approximately 22.2 times the annual spending your investments need to provide. It supports more spending from each pound invested than 4% and asks for regular review and sensible changes when needed.
5% Flexible Burn Rate
Approximately 20 times the annual spending your investments need to provide. It supports the most spending now and depends more heavily on flexible spending, active review and a genuine willingness to respond.
None is the prize. Each makes a different trade-off between the size of the starting Fund, spending now and the changes you may need to make later.
What should I do next?
Copy your result and keep it with your Freedom plan. Then test all three Burn Rates in the Freedom Calculator rather than treating one percentage as a prediction of the future.
Important: This is an educational tool, not regulated financial advice. It cannot predict investment returns or guarantee that money will last. Tax, fees, inflation, investment mix, spending changes and personal circumstances all matter. Read the full Rebel Donegans disclaimers.