Retirement Withdrawal Calculator

Suppose you retire with a $1,000,000 portfolio and want to spend $50,000 a year. Earning a steady 6% return with 3% inflation and raising your spending each year to keep pace, the money lasts roughly 30 years before it runs dry. Drop your spending to the classic 4% rule figure of $40,000, and the same portfolio comfortably outlives a 30-year retirement with a balance left over. That single decision - $50,000 versus $40,000 - is the difference between money that lasts and money that doesn't, and it is exactly what this retirement withdrawal calculator is built to show.

How the calculation works

The calculator runs a simple drawdown simulation, one year at a time. Each year it withdraws your spending amount, then grows whatever is left by your expected return:

If you keep the inflation option on, next year's withdrawal rises by your inflation rate, so your real spending power stays level: Withdrawalnext = Withdrawal × (1 + inflation). The loop repeats until the balance can no longer cover a full withdrawal - that year is when "your money runs out." The 4% reference is calculated separately as 0.04 × starting portfolio so you can compare your plan against the most-cited benchmark.

What is the 4% rule?

The 4% rule comes from research now known as the "Trinity study." The idea: withdraw 4% of your portfolio in your first year of retirement, then increase that dollar amount by inflation every year after. On a $1,000,000 portfolio that means $40,000 in year one, about $41,200 the next year at 3% inflation, and so on. In historical U.S. backtests of a balanced stock-and-bond portfolio, this pace survived at least 30 years in almost every starting year. It is a guideline, not a guarantee - but it remains the most useful starting point for retirement spending.

How to use this calculator

You only need four inputs to get a realistic picture. Work through them in order:

1. Portfolio value: enter your total invested savings at retirement (401(k), IRA, brokerage, etc.).
2. Withdrawal: choose a dollar amount per year, or switch to "withdrawal rate" and enter a percentage. The 3%/4%/5% shortcut buttons fill in common rates instantly.
3. Expected return: use a long-run estimate for your asset mix - many planners assume 5%-7% for a balanced portfolio after a conservative haircut.
4. Inflation: 2%-3% is typical for long-term U.S. planning. Leave the inflation box checked so your spending keeps its buying power.

Press Calculate and read the headline number - the years your money lasts - then scroll the annual table to watch the balance rise from growth and fall from withdrawals year by year.

Who this calculator is for

This tool helps anyone turning a nest egg into income. That includes:

• Near-retirees deciding whether their savings can support the lifestyle they want.
• Early retirees / FIRE planners who need money to last 40+ years, not 30, and therefore lean toward lower withdrawal rates.
• Current retirees sanity-checking whether their spending is sustainable or needs trimming.
• Anyone comparing strategies - fixed dollar vs. fixed percentage, 3% vs. 4% vs. 5% - to see the trade-off between income and longevity.

If you are still building toward retirement rather than spending down, pair this tool with the 401(k) Calculator or the Compound Interest Calculator first to project the balance you will arrive with, then return here to plan the drawdown.

Key retirement-income terms

• Withdrawal rate: the percentage of your starting portfolio you take in year one. A $50,000 withdrawal from $1,000,000 is a 5% rate.
• Safe withdrawal rate (SWR): the rate you can sustain for your whole retirement with a high probability of not running out - often quoted as 3%-4.5%.
• Drawdown: the phase of life when you spend down your portfolio rather than add to it.
• Sequence-of-returns risk: the danger that bad markets early in retirement do outsized, lasting damage because you are selling into a downturn.
• Real vs. nominal: "real" figures are adjusted for inflation (buying power); "nominal" are raw dollars. Keeping spending level in real terms is the goal of the 4% rule.
• Nest egg: the total pool of retirement savings you draw from.

Three scenarios on a $1 million portfolio

Holding the portfolio at $1,000,000, a 6% return, and 3% inflation, watch how the withdrawal rate changes the outcome:

• 4% ($40,000/yr): the portfolio lasts well beyond 30 years and still has a sizable balance - the textbook "safe" pace.
• 5% ($50,000/yr): the money lasts roughly 30 years - fine for a standard retirement, risky for an early one.
• 6% ($60,000/yr): the portfolio is exhausted in roughly 23 years, which may fall short of a long retirement.

The lesson: each extra percentage point of spending cuts years off how long the money lasts, and the effect compounds because you are also giving up the future growth on the dollars you spent early.

A second worked example: a smaller portfolio at the 4% rule

Not everyone retires with a million dollars, and the math scales cleanly. Say you reach retirement with a $600,000 portfolio and follow the 4% rule. Your first-year withdrawal is $24,000 (roughly $2,000 a month), rising with inflation each year afterward. Pair that with about $22,000 a year in Social Security and your total income is close to $46,000 in year one - and crucially, only the $24,000 portion comes from savings. Earning a steady 6% return with 3% inflation, this $600,000 comfortably funds a 30-year retirement at that pace because the 4% starting rate leaves enough cushion for growth to outrun your withdrawals in most years. Bump the withdrawal to $30,000 (a 5% rate) and the same balance runs out closer to year 30; push it to $36,000 (6%) and it is gone in roughly 23 years. The takeaway is that the safe dollar amount changes with portfolio size, but the safe percentage stays roughly constant - which is exactly why withdrawal rate, not portfolio size, is the number to watch.

Fixed-dollar vs. fixed-percentage withdrawals

There are two broad ways to take money out, and the calculator lets you model either by switching between the dollar and rate inputs:

• Fixed inflation-adjusted dollar (the 4%-rule approach): you set a starting amount and raise it by inflation every year, ignoring what the market does. Income is steady and predictable, which makes budgeting easy - but in a long bear market you keep withdrawing the same real amount from a shrinking balance, which is what causes portfolios to fail.
• Fixed percentage of the current balance: you take, say, 4% of whatever the portfolio is worth each year. This can never fully run dry because you always spend a slice of what remains, but your income drops sharply after a bad year - a 30% market fall cuts your paycheck by 30%, which is hard to live on.

Most real-world retirees land between the two with a "guardrail" strategy: start near 4%, then cut spending modestly (often 10%) if the withdrawal rate drifts too high after a downturn, and allow a raise after strong years. Guardrails capture most of the predictability of the fixed-dollar method while adding much of the safety of the percentage method. The flat-return model here cannot simulate those year-to-year adjustments, but you can approximate the bounds by running both a conservative and an optimistic return through the calculator and comparing how long the money lasts in each case.

Why early retirement needs a lower rate

The 4% rule was calibrated to a 30-year retirement - the horizon of someone retiring around 65. If you stop working at 50 or 55, your savings may need to last 40 to 45 years, and that longer runway changes the math significantly. Over a longer horizon there are more chances to hit a damaging early downturn, and a fixed real withdrawal has more years to outpace your portfolio's growth. Research into longer retirements often points to a starting rate closer to 3% to 3.5% for a high probability of success over 40+ years. In practical terms, funding a $40,000 lifestyle indefinitely takes roughly $1,000,000 at 4% but closer to $1,150,000-$1,300,000 at 3% to 3.5%. If you are planning an early or "FIRE" retirement, use this calculator with a longer horizon in mind and a lower rate, and remember that part-time income or a paid-off home can meaningfully ease the pressure on the portfolio. To see how large a balance you would need to build first, work backward with the Retirement Calculator.

What changes the result the most

Adjust the inputs and a few levers clearly dominate:

• Withdrawal rate: the single biggest factor - small spending changes swing the outcome by many years.
• Expected return: a higher return stretches the money, but optimistic assumptions are the most common planning error.
• Inflation: rising prices force ever-larger withdrawals, draining the portfolio faster than a flat spending plan would.
• Retirement length: a plan that "works" for 30 years may fail over 45 - early retirees need lower rates.
• Portfolio size: a larger nest egg supports the same lifestyle at a lower, safer percentage.

Tips for a withdrawal plan that lasts

• Start conservative: if your retirement could exceed 30 years, consider a 3%-3.5% starting rate rather than 4%.
• Stay flexible: "guardrail" strategies trim spending after bad years and allow raises after good ones, which protects the portfolio.
• Hold a cash buffer: 1-2 years of spending in cash lets you avoid selling investments during a downturn.
• Layer guaranteed income: Social Security, a pension, or an annuity covers baseline needs so your portfolio only funds the extras.
• Mind the tax order: coordinating taxable, tax-deferred, and Roth withdrawals can meaningfully extend your after-tax income.

Limitations and assumptions

This is a planning model, not a prediction. Keep these assumptions in mind:

• It assumes a single, steady annual return. Real markets are volatile, so it cannot capture sequence-of-returns risk - the order of good and bad years matters enormously in reality.
• It excludes taxes and investment fees, both of which reduce the income your portfolio actually delivers.
• It does not model Social Security, pensions, or annuities, which can dramatically reduce how much you need from savings.
• It ignores required minimum distributions (RMDs) and lump-sum needs like a new roof or medical costs.
• Withdrawals are treated as taken at the start of each year; different timing assumptions shift the result slightly.

How it compares to related calculators

This page answers "how long will my savings last once I'm spending them?" For a different question, a sister tool fits better:

• To project how big your nest egg will grow before retirement, use the Retirement Calculator.
• To model a workplace plan with employer matching, use the 401(k) Calculator.
• To estimate tax-free growth of after-tax savings, use the Roth IRA Calculator.
• To grow a lump sum or regular contributions over time, use the Investment Calculator or Compound Interest Calculator.
• To evaluate a single investment's payback, use the ROI Calculator.

Sources

• U.S. Securities and Exchange Commission (Investor.gov) - compound interest and investment growth basics.
• Social Security Administration - Retirement Benefits (a key source of guaranteed retirement income).
• Internal Revenue Service - Required Minimum Distributions (RMD) FAQs.