How to use the retirement withdrawal calculator
- Enter your savings at retirement, and the first-year withdrawal you plan to take at the start of the first year.
- Enter an assumed yearly return and the yearly increase in withdrawals, which is usually inflation.
- Enter how many years the money has to last.
- Read the ending balance or the year the savings run out, the total withdrawn and the highest first-year withdrawal that would last. Download the table as CSV or PDF.
Formula
Withdrawal in year n = first withdrawal x (1 + increase)^(n - 1)
Balance after year n = (balance at start - withdrawal) x (1 + return)
Starting withdrawal rate = first withdrawal / savings
Highest first withdrawal that lasts = savings / sum for t = 0 to N - 1 of ((1 + increase) / (1 + return))^t
Withdrawals are taken at the start of each year, and what is left earns the return for the full year. The last formula is the closed form of a growing annuity, and it makes the balance exactly zero after the chosen number of years.
Worked example
Savings of $1,000,000, a $40,000 first-year withdrawal (a 4% starting rate), a 5% return and 3% yearly increases for 30 years. In year 1 the balance falls to $960,000 and grows to $1,008,000. In year 2 the withdrawal is $41,200 and the balance ends at $1,015,140.
After 30 years the balance is $343,114.58, with $1,903,016.63 withdrawn in total and a final-year withdrawal of $94,262.62.
The highest first-year withdrawal that lasts exactly 30 years at these assumptions is $43,449.40. With only $300,000 of savings, the same plan runs out in year 9.
What this projection can and cannot tell you
A fixed return is a simplification. Real investments rise and fall, and the order of returns matters. A steep fall early in retirement while you are taking withdrawals can drain savings much faster than the same fall late in retirement. For that reason, treat the highest steady withdrawal as an upper bound that assumes steady returns, and plan with a margin.
Withdrawal rates quoted in the media, such as 4 percent of the starting balance, are rules of thumb and come from studies of past markets. They are not guarantees and depend on the mix of investments and the length of retirement.
Things to adjust
Try several scenarios to see how sensitive the plan is.
- Lower the return by a point or two to see a weaker market.
- Increase the inflation figure to see the effect of rising prices on a fixed lifestyle.
- Extend the number of years. Many plans need to cover 30 years or more.
- Remember income from Social Security, a pension or part time work, which lowers what you need from savings and is not in this calculator.
Assumptions and limits
- Returns, inflation and withdrawals are the same every year. Real markets are volatile.
- Taxes, fees, Social Security, pensions and required minimum distributions are not modeled.
- Withdrawals happen at the start of each year, and the balance earns the return for the whole year after the withdrawal.
- This is an educational projection, not financial advice. Talk with a licensed professional about your own plan.
Frequently asked questions
How long will my retirement savings last?
It depends on the size of the withdrawals, the return and inflation. Enter your savings, first-year withdrawal and assumptions, and the table shows the balance each year and the year the money runs out, if it does.
What is the 4 percent rule?
It is a rule of thumb that suggests withdrawing 4 percent of your starting balance in the first year, then increasing the amount with inflation. It comes from studies of past markets and is not a promise. Enter 4 percent of your savings as the first withdrawal to try it.
How do I find the most I can withdraw each year?
The result shows the highest first-year withdrawal that leaves exactly zero after your chosen number of years at your assumed return and inflation. Because returns vary in real life, use a lower figure to leave a margin.
Should withdrawals rise with inflation?
Many people increase them to keep the same buying power, which this tool does by default. Set the increase to zero to model a fixed withdrawal, which is easier on the portfolio but loses value as prices rise.