Glossary
Plain-language definitions of the terms used across these calculators.
- Safe withdrawal rate (SWR)
- The percentage of your starting portfolio you withdraw in year one of retirement, then adjust for inflation. 4% is the conventional benchmark.
- Sequence-of-returns risk
- The risk that poor returns early in retirement permanently damage a portfolio, even if the long-run average is fine. Selling into a downturn to fund withdrawals is what does the damage.
- Total return
- Price change plus reinvested dividends or interest. All series used here are total returns, which is why they exceed the headline index price change.
- Real vs nominal
- Nominal figures are raw currency amounts. Real figures are adjusted for inflation to reflect purchasing power. Our backtests run on nominal returns with inflation applied to withdrawals.
- Rebalancing
- Periodically restoring your portfolio to its target weights by selling what grew and buying what lagged. The backtest assumes this happens once a year, free of cost.
- Rolling window
- A backtesting method that tests every possible consecutive period of a given length. A 30-year test on 1928–2026 data produces 70 overlapping windows.
- Guardrails
- Floors and ceilings on annual withdrawals. A floor protects your minimum lifestyle; a ceiling stops good years inflating spending permanently.
- Coast FIRE
- The point where existing investments will compound to your retirement target on their own, so you only need to cover current expenses and can stop contributing.
Related tools
FIRE Calculator
Find out when you'll reach financial independence, based on your savings rate and the 4% rule.
Historical Backtest
Test a portfolio against real historical returns, now with Monte Carlo simulation and dynamic (Guyton-Klinger) withdrawal strategies.
Historical Returns
See the annualized and year-by-year return of any asset class over any period.
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