The 4% rule is one of the most cited guidelines in financial independence planning. It states that you can withdraw 4% of your initial retirement portfolio in the first year, then adjust that amount for inflation each subsequent year, with a high probability of not outliving your money over a 30-year retirement.

The rule originated from the Trinity Study (1998), which examined historical U.S. market data. It assumed a portfolio of 50% stocks and 50% bonds. For India, many advisors suggest using 3–3.5% due to higher inflation and potentially different market return assumptions.

The 4% rule is a starting point, not a guarantee. Sequence of returns risk—poor early-year returns—can significantly impact outcomes. Many FIRE adherents use the rule as a planning target but remain flexible in practice.