Percent of Portfolio Calculator
A fixed percentage of the current portfolio value, taken again each year as the balance rises and falls.
Part of the FIRE simulator, a historical backtest calculator that replays your plan across every rolling window of market history since 1871.
How the Percent of Portfolio strategy works
Each year the rule takes the same percentage, for example 4%, of whatever the portfolio is worth at that moment, so spending moves one-for-one with the balance. Because the withdrawal is always a fraction of what is left, the portfolio can never be fully depleted. Optional floors and ceilings, set in first-year money and grown with inflation, bound how far spending can swing.
What the Percent of Portfolio strategy trades off
Every withdrawal is a share of what remains, so the portfolio cannot be fully depleted and spending self-corrects after a crash. The correction cuts income furthest in the years it is hardest to cut.
Pros and cons
Pros
- Mathematically impossible to fully deplete the portfolio
- Spending self-adjusts to market conditions
- Optional floor/ceiling bands tame the volatility
Cons
- Highly variable year-to-year income
- A prolonged downturn forces painful spending cuts
- Hard to budget a household around
Parameters you can adjust
- Withdrawal percent: The share of the current portfolio withdrawn each year. Higher spends more now but draws the balance down faster after bad years.
- Spending floor (year-1 money, 0 = none): A minimum yearly withdrawal, set in first-year money and grown with inflation, so spending never drops below it. Set 0 to disable the floor.
- Spending ceiling (year-1 money, 0 = none): A maximum yearly withdrawal, set in first-year money and grown with inflation, so spending never rises above it. Set 0 to disable the ceiling.
Backtest Percent of Portfolio against market history
Opens the simulator with Percent of Portfolio already selected, so you only set your portfolio and horizon.