The 2% rule is a concept that suggests a lower withdrawal rate than the traditional 4% rule for retirement spending . The 4% rule states that you can safely withdraw 4% of your portfolio in the first year of retirement and adjust that amount for inflation each year thereafter . However, the 2% rule suggests that a lower withdrawal rate, such as 2%, may be more appropriate for sustainable retirement spending . This is because the 4% rule does not account for factors such as taxes, different investment returns, and longer retirement periods . By being more conservative with your withdrawal rate, you reduce the risk of running out of money during your retirement .