Withdrawal Strategies: The 4% Rule with Bitcoin

Short answer: The 4% rule says: in your first year of retirement you withdraw 4% of your wealth, and every year after that the same amount plus inflation. With bitcoin it works as a starting point, but not as a rigid rule. If a 75% crash comes right after you retire, you sell too many sats. Better: tie your withdrawal to the Power Law floor or keep a buffer in euros or francs.

Why withdrawing is harder than saving

When you save, every crash helps you: you get more sats for your money. When you withdraw, it's the other way round. Every euro you need at the bottom costs you more sats. And those sats are missing later, once the price has recovered.

So the key question for retiring on bitcoin is not just how much you have. It is also: by what rule do you sell? How much you need in total is worked out in the article How many sats do I need to retire?. This one is about how you draw down your savings without using them up at the wrong moment.

What the 4% rule says

In 1994 the US financial planner William Bengen studied how much retirees could withdraw each year from a portfolio of stocks and bonds without the money running out before 30 years were up. His result: with 4% in the first year and the same amount plus inflation after that, the portfolio would have lasted at least 30 years for every starting year since 1926. The so-called Trinity study largely confirmed this in 1998.

In practice the rule looks like this:

1. Set the starting amount: 4% of your wealth on the first day of retirement. With €500’000 that's €20’000 a year.
2. Adjust every year: in the second year you withdraw the same amount plus inflation, so €20’400 at 2%. The price plays no role.
3. The flip side: your wealth should be 25 times your annual expenses.

The rule's strength is predictability: you know every year how much money is coming. Its weakness shows with bitcoin.

The problem: a crash right after you retire

Professionals call it sequence risk: what matters is not only the average return, but when the bad years come. A crash in your first year of retirement does far more damage than the same crash in your twentieth.

An example with real prices: on Nov 8, 2021, bitcoin closed at $67’525, the peak of that cycle. Anyone who retired that day with 1 BTC and the 4% rule planned to withdraw $2’701 a year. A little over a year later, on Nov 21, 2022, a bitcoin cost only $15’784. The same $2’701 now equalled 17% of the original holdings.

In a severe crisis, a stock portfolio falls 30 to 50%. Since 2013, bitcoin has fallen 53 to 85% four times. A rule that ignores the price sells a great many sats in such phases.

Four withdrawal strategies with bitcoin compared

There are four simple rules you can apply with bitcoin. All start at 4%; they differ in what the 4% refers to.

Fixed amount: simple and predictable. But in a bear market you sell the most sats at the worst price.

Fixed percentage: your holdings can never fall to zero, because you only ever sell a share. In return, your income swings just as much as bitcoin. If the price falls 75%, your withdrawal falls 75% too. That only works for rent and groceries if you have other income.

Floor rule: this is the logic of the Retire on Bitcoin calculator. You value your holdings not at the day's price but at the floor of the Power Law model. The floor sits at 42 % of the Power Law line and rises steadily in the model. So your income hardly fluctuates. When the price is far above the floor, you sell only a few sats.

Buffer: you take two years' expenses out of your bitcoin holdings and put them in an account. When the price is below 0.8 times the trend, clearly below fair value, you live off this account. When it is higher, you sell bitcoin for your expenses and refill the buffer.

The test with real prices: retiring at the peak

How do the four rules hold up in the worst case? We ran them through this site's daily closing prices: starting with 1 BTC at the cycle peak, withdrawing every month, 2% inflation, as of Nov 1, 2026. The calculation is in US dollars, because the price series is in dollars. The amounts are per $100’000 starting value.

Retiring on Nov 8, 2021 (peak at $67’525)

Source: own calculation from /power-law/btc-daily.csv, as of Nov 12, 2026.

The result shows the trade-off. The fixed amount pays out the most and costs a third of the holdings. The floor rule spares the holdings the most, but pays out little after a peak: in November 2021 the price stood at 2.75 times the trend, so the floor was far below. The buffer sits in between. It keeps the full income and saves sats, because it sells nothing from mid-2022 to November 2023, while the price was low.

From the peak of Dec 16, 2017 ($19’641, then −84%), the picture is the same, only stronger: after almost nine years, the fixed amount left 0.55 BTC, the floor rule 0.84 BTC.

What the rules mean for you today

At the price of Nov 13, 2026, the rules look like this for 1 BTC:

What happens next? Two scenarios show the range:

• The price runs only along the floor. With the floor rule and a start on Jan 1, 2027, the model would leave you with 0.82 BTC in 2032 and a withdrawal of about €8’300 (CHF 7’700) a year, and 0.67 BTC in 2037 with about €20’800 (CHF 19’200). That's because the floor in the model rises by a good 30% a year at first, more slowly later.
• The model breaks and the price stays at €64’516. Then the fixed amount of €2’581 plus 2% inflation lasts a good 20 years before the holdings are used up. The floor rule then withdraws only 4% of the price, and your income falls 4% every year.

Both are model calculations at the fixed exchange rate of Nov 13, 2026, not a forecast. How the Power Law model is built and where its limits are is explained in the methodology and the article Bitcoin Power Law.

Your withdrawal strategy in five steps

1. Separate your basic needs: work out what you need for certain every month and what would be nice to have. The cautious floor rule should be able to carry your basic needs, together with your pension and other income.
2. Build a buffer: set aside one to two years' expenses in euros or francs, ideally already at the last peak before retirement. How to recognise a peak is shown by the zones on the Power Law page.
3. Write down your rule: note when you sell, how much, and when you live off the buffer. A rule you write down in calm times is one you are more likely to stick to in a crash. Why that is so hard is explained in HODL psychology: coping with volatility.
4. Sell once a year: one fixed date per year or quarter is enough. Watching the price more often tempts you into gut decisions.
5. Review every year: compare your holdings with the plan. If the price stays below the floor for long, withdraw less or postpone larger expenses.

An alternative to selling at the bottom is a loan with bitcoin as collateral. It spares your holdings, but carries the risk of forced liquidation if the price keeps falling. When it pays off and how big the loan may be is explained in the article Bitcoin loans: borrow instead of selling.

Calculate your own withdrawal

The "Retire on Bitcoin" calculator works with the floor rule: you enter your holdings and expenses, and it shows from when 4% of your holdings at the floor price covers your expenses. You can change the withdrawal rate and inflation under "More settings".

If you'd rather see a range than a line, the Monte Carlo calculator plays through thousands of possible price paths. How withdrawal fits into your whole plan, with target amount, date and selling rules, is covered in the guide Setting and planning your bitcoin goal. The academy goes deeper into "Plan and live".

Taxes on withdrawals

Every withdrawal is a sale. What the tax office gets depends on the country (as of 2026):

• Germany: gains on bitcoin you have held for more than a year are tax-free. If you sell younger coins, gains up to €1’000 a year are exempt, above that fully taxable. As a rule, the coins bought first count as sold first. If you have saved for a long time, your withdrawals are therefore usually tax-free. Details in Bitcoin taxes in Germany.
• Austria: gains on bitcoin bought from March 2021 onward are taxed at 27.5%, regardless of the holding period. Plan your gross withdrawal correspondingly higher.
• Switzerland: capital gains on private assets are generally tax-free. But your holdings count as wealth and are subject to wealth tax.