The "4% rule" is a guideline used in retirement planning that suggests retirees can withdraw 4% of their investment portfolio annually without running out of money over a 30-year period. This rule is based on historical market performance and aims to provide a sustainable income while preserving the principal amount. To apply the 4% rule, individuals first need to determine their total retirement savings, which may include assets like stocks, bonds, and real estate. By multiplying their total savings by 4%, they can estimate the amount they can safely withdraw each year, adjusting for inflation as needed.