Safe Withdrawal Rate India 2026: Is 3% Safer Than the 4% Rule?

The biggest fear in retirement isn't death—it's running out of money before death. You have spent decades building a corpus, but how much can you safely spend every month?

Withdraw too much, and you risk going bankrupt at age 75. Finding the "Safe Withdrawal Rate" (SWR) is about finding the perfect balance between living well today and staying safe tomorrow in India.

Safe withdrawal rate decisions should never be made in isolation. They depend on your total retirement corpus, asset allocation, and inflation assumptions. For a full, end-to-end framework, refer to our Retirement Planning in India guide .

1. What is a "Safe Withdrawal Rate"?

The Safe Withdrawal Rate (SWR) is the percentage of your retirement corpus you can withdraw in the first year of retirement, adjusting that amount for inflation every subsequent year, such that your money never runs out for at least 30 years.

While the Safe Withdrawal Rate explains how much you can withdraw, your actual FIRE number depends on your expenses, age, inflation, and returns. Use our FIRE Calculator for India to calculate your personalized Barista, Standard, or Fat FIRE corpus.

2. Why the US "4% Rule" Fails in India

The famous "4% Rule" comes from the US-based Trinity Study conducted using historical US market data. It says a 4% withdrawal rate is safe for 30 years.

However, this assumes:

• US Inflation: 2-3% historical average.
• US Market Stability: Dollar stability.

In India, inflation is 6-7%. This means your withdrawals need to increase much faster than in the US to maintain your lifestyle. If you blindly follow the 4% rule in India in 2026, you risk depleting your corpus in 20–22 years.

3. Safe Withdrawal Rate: India vs US (4% Rule Comparison)

The traditional 4% rule is based on US historical data where inflation averaged 2–3% and bond yields were relatively stable. In India, inflation has historically averaged closer to 6–7%, and market volatility can be significantly higher.

This difference changes everything. A withdrawal strategy that survives 30 years in the US may not survive 25 years in India unless your portfolio generates strong real (inflation-adjusted) returns.

For Indian retirees — especially those pursuing FIRE — blindly applying the US 4% rule can be dangerous. Higher inflation means withdrawals must rise faster each year, increasing the risk of exhausting the corpus early.

Final Verdict: In India, a 3% withdrawal rate is generally safer than the traditional US 4% rule because inflation is structurally higher and retirement periods are often longer.

4. Safe Withdrawal Rate Math for India (Inflation & Longevity)

For a portfolio to survive 30+ years in India with 6% inflation, it needs to generate significant Real Return (Returns minus Inflation).

In retirement planning, what truly matters is real return (nominal return minus inflation). If your portfolio earns 10% but inflation is 7%, your real return is only 3%. Withdrawal rates higher than real returns will slowly destroy capital.

If your portfolio earns 9% (Conservative Hybrid) and Inflation is 6%, your real growth is only 3%. If you withdraw 4%, you are eating into your principal from Day 1 in real terms. Eventually, the pot runs dry.

5. Comparison: 3% vs 4% vs 6%

Let's simulate a ₹2 Crore Corpus over 30 years with 6% inflation adjustments.

6. Sequence of Returns Risk

Averages lie. Even if market returns average 12% over 20 years, what happens if the market crashes 30% in the first 2 years of your retirement?

If you keep withdrawing a fixed amount from a shrinking portfolio, you deplete it so fast that it never recovers even when the market booms later. This is why a lower withdrawal rate acts as a buffer against bad market timing.

7. Safe Withdrawal Rate India 2026 – Final Verdict

In 2026, considering India's inflation of 6–7%, rising healthcare costs, and longer life expectancy, the safest withdrawal rate for most retirees is between 2.5% and 3.5%.

• Early retirees (FIRE, age 40–50): 2.5%–3%
• Traditional retirees (age 60+): 3%–4%
• Late retirement (75+): 5% may be acceptable

The final decision should be based on your corpus size, expected real return, and withdrawal flexibility during market downturns.

8. How to Choose Your Rate

Choosing the right safe withdrawal rate in India depends on three factors: retirement age, expected retirement duration, and portfolio risk tolerance. Early retirees following the FIRE approach face a much longer retirement horizon, making lower withdrawal rates essential. Traditional retirees can afford slightly higher rates because their corpus needs to last fewer years. There is no single “perfect” rate — the safest withdrawal rate is the one that matches your time horizon and inflation-adjusted spending needs.

Once you select a conservative withdrawal rate, the next step is to verify whether your savings can actually support early retirement. Our FIRE Calculator shows how different withdrawal rates (3%, 4%, or 6%) impact your retirement age and corpus.

• FIRE (Retire at 40-50): Stick to 2.5% - 3%. You need your money to last 40+ years.
• Standard Retirement (Age 60): You can risk 3.5% - 4%.
• Late Retirement (Age 75+): You can safely withdraw 5-6% as longevity risk is lower.

Ready to find your number? Use our Retirement Planning Calculator to reverse-engineer your required corpus based on these rates.