The 4% Rule: Should You Withdraw Annually or Quarterly?

An Analysis of Impact on Withdrawal Rate by Withdrawal Cadence

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In one of my articles, I talked about how to optimize the 4% rule to search for better Safe Withdrawal Rates (SWR). There are plenty of resources on how to build a 4% rule-based portfolio, but there is very little information online about how to withdraw. Withdrawal is the second most important part of executing the 4% rule, following building the portfolio.

One of the questions regarding withdrawal is when I should withdraw and how often I should withdraw. In this article, I will analyze data and explore withdrawal cadences.

(If you would like to skip the data analysis and go straight to see which cadence is better, scroll directly to the conclusion section.)

Base Case and Hypothesis

If we look back at the definition of the 4% rule, we know it is based on an annual withdrawal cadence:

In the first year of your retirement, you can safely withdraw no more than 4% of your stocks + bond portfolio. For each subsequent year, for 30 years, you can continue to withdraw the same amount with inflation adjustments without depleting your portfolio.