How to use the retirement withdrawal calculator
- Enter your starting savings and the amount you plan to withdraw, and how often.
- Choose how many years the money needs to last.
- Enter an average annual return after fees and an inflation rate. Tick the box if withdrawals should rise with inflation to keep their purchasing power.
- Review the balance chart, the comparison table and the sustainable withdrawal.
How the calculation works
The projection runs period by period. At the start of each month, quarter or year the withdrawal is taken out, and the remaining balance then grows at the periodic equivalent of your annual return ((1 + annual)1/periods − 1). If inflation adjustment is on, the withdrawal increases by the inflation rate once a year.
The sustainable withdrawal is the largest starting withdrawal that leaves the balance just above zero at the end of the horizon, found by repeatedly running the same projection. The withdrawal comparison re-runs the plan at 80%-120% of your amount.
Formula
- B
- Balance
- W
- Withdrawal per period
- R, i
- Annual return and inflation rate (decimals)
- k
- Withdrawals per year (12, 4 or 1)
Worked examples
$800,000, $3,000 a month, 5% return, 2.5% inflation
The initial withdrawal rate is 3,000 × 12 ÷ 800,000 = 4.5% a year. With withdrawals rising 2.5% a year and a steady 5% return, the projection shows how long the balance holds up over 30 years; the comparison table shows the effect of withdrawing $2,400-$3,600 instead.
A simple check without inflation
$100,000 withdrawn at $10,000 a year (start of year) with 0% return lasts exactly 10 years. With a 5% return it lasts about 13.3 years, because the remaining balance keeps earning.
Assumptions and limitations
- Assumes the same return every year. Real returns vary, and a few bad years early in retirement (sequence-of-returns risk) can deplete savings much sooner than an average suggests.
- Taxes on withdrawals, required minimum distributions, fees not included in your return estimate, and other income are not modelled. For income such as a pension or Social Security, see the how long will my money last calculator.
- Projections are illustrations, not guarantees or financial advice. Consider speaking with a qualified financial professional.
Frequently asked questions
What is the 4% rule?
A rule of thumb from historical US market studies: withdrawing 4% of savings in the first year and then adjusting for inflation lasted at least 30 years in most historical periods tested. It is not a guarantee, and results depend on asset mix, fees, taxes and future markets.
What does “sustainable withdrawal” mean here?
It is the starting withdrawal that would last exactly your chosen number of years if returns and inflation were constant at your inputs. Lower assumed returns or higher inflation reduce it.
Should withdrawals be adjusted for inflation?
If you want your spending power to stay the same, yes. Without adjustment, the same dollar amount buys less each year.