Where the famous 4% rule came from, why the math changes in Korea, and how the withdrawal burden splits before and after the National Pension starts — in order. You can check your own numbers in the simulator at the bottom of this page.
It refers to research showing that if you withdraw 4% of your savings in the first year of retirement and then raise the amount only by inflation each year, savings historically were not depleted over 30 years in US markets.
It began with US financial planner William Bengen's 1994 research. He showed that even when tested against the worst historical periods since 1926, a withdrawal rate in the low 4% range from a stock-bond portfolio could be sustained for more than 30 years. In 1998, three professors at Trinity University (the Trinity Study) extended the method across asset allocations and withdrawal rates and published it as tables, spreading the name "the 4% rule."
Overseas FIRE (early retirement) communities and tools such as FIRECalc developed this approach into backtests against the full range of historical returns. Their core feature — "the success rate across all historical periods" — rests entirely on the past of the US market.
In short, it is hard to apply directly. Three of its premises do not hold.
So a Korean drawdown calculation should start not from "what percentage of my assets should I withdraw?" but from "where are the periods and amounts the pension does not reach?"
Savings no longer carry living costs alone. Once the pension starts, the monthly benefit covers the fixed portion of spending, and you withdraw only the shortfall from savings. Using the simulator's example values, the difference looks like this.
| Phase | Annual spending | Covered by pension | Withdrawn from savings | Withdrawal burden |
|---|---|---|---|---|
| Before pension starts (ages 60–64) | ₩36M (first year) | ₩0 | Full amount | 7.2% of savings per year |
| After pension starts (age 65+) | ₩39.74M (at age 65) | ₩15.9M | Shortfall ₩23.84M | About two-thirds of the pre-pension burden |
The first-year withdrawal rate in the five years before the pension starts is 7.2% — nearly double the 4% rule. After it starts, however, the inflation-indexed pension makes withdrawals grow more slowly than living costs. The simulator's depletion result (running out at 86 in the moderate scenario) is ultimately decided by how much savings shrink during this bridge period.
One more point: the National Pension is itself an inflation-indexed lifetime pension. Against the combination the 4% rule fears most — "inflation plus longevity" — the pension portion is already hedged. The remaining risk narrows to the periods and amounts the pension does not reach.
There is no single right number. But you can set criteria for judging.
If the pension covers more than half of living costs, withdrawals from savings are mostly for variable spending. If you get through the bridge period safely, the post-pension withdrawal rate often falls below 4%, so the structure can be stable even if the initial withdrawal rate looks high.
This is close to the 4% rule's original picture, where savings must cover all living costs for 30+ years. In that case, keep the first-year withdrawal rate around 4% and combine it with a rule that trims withdrawals in market downturns (for example, withdrawing a percentage of the remaining balance rather than a fixed amount).
Either way, the way to check is the same: line up conservative (2%), moderate (4%), and optimistic (6%) scenarios rather than a single return assumption, and use whether savings last to your plan-to age in the conservative scenario as your benchmark. A downturn in the first years of retirement pulls depletion forward even at the same average return (sequence-of-returns risk), so the early years deserve a separate margin.
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A rule of thumb from US research (Bengen 1994; Trinity Study 1998): withdraw 4% of your savings in the first year of retirement, then raise the amount only by inflation, and the money historically lasted 30 years. It assumes the historical returns of a US stock and bond portfolio.
It is difficult. Drawdown periods often exceed 30 years, the market environment differs, and above all the National Pension covers a substantial share of living costs, so the withdrawal structure itself is different. You need to calculate separately for before and after the pension starts.
Yes. Before the pension starts, the full amount of living costs comes out of savings, and withdrawal rates can exceed 7% a year. Whether savings last depends heavily on the length of this bridge period.
Because the drawdown period is long, even a 2-percentage-point difference compounds into a several-fold difference in the final balance. And because real returns are uneven, a downturn right after retirement pulls depletion forward even at the same average (sequence-of-returns risk).
The normal pension starting age is 65, but many people retire earlier, leaving a gap with no income in which savings cover all living costs. Savings can shrink greatly before the pension even begins, so how to cover this period is the first task of drawdown design.
No. It is a reference calculation under a constant-return assumption and does not reflect market volatility, taxes, health insurance premiums, or unexpected spending. Use the depletion age as an indicator of vulnerable periods, not as a prophecy.
References: Bengen, W. (1994) "Determining Withdrawal Rates Using Historical Data", Journal of Financial Planning; Cooley, Hubbard & Walz (1998) "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable" (the Trinity Study); FIRECalc's (firecalc.com) historical-return success-rate method. The National Pension's benefit starting age (65 for those born in 1969 or later) and inflation indexation follow National Pension Service (NPS) guidance. Verified October 21, 2026.