Enter your details above to see how long your money will last.
Understanding Retirement Withdrawal Rates
Planning for retirement is fundamentally about balancing your accumulated assets against your future spending needs. The Retirement Withdrawal Rate is a critical metric that measures the percentage of your total portfolio value that you withdraw annually to cover living expenses.
Calculating this rate accurately is essential for ensuring your savings do not deplete prematurely. A sustainable withdrawal rate allows your portfolio to survive market fluctuations and inflation over a retirement period that could last 30 years or more.
The 4% Rule Explained
The most famous benchmark in retirement planning is the 4% Rule, derived from the Trinity Study. This guideline suggests that if you withdraw 4% of your portfolio in the first year of retirement and adjust that dollar amount annually for inflation, you have a very high probability of not running out of money over a 30-year period.
However, the 4% rule is not a guarantee. It assumes a balanced portfolio (usually 50% stocks and 50% bonds) and historical market returns. If your current withdrawal rate is significantly higher than 4%, you face a higher risk of portfolio depletion.
How to Interpret Your Results
This calculator determines two key figures:
Withdrawal Rate: Your annual spending divided by your total savings. Lower is generally safer.
Portfolio Longevity: The estimated number of years your money will last, factoring in your investment growth and the erosion of purchasing power due to inflation.
Key Factors Affecting Solvency
Several variables impact how long your retirement savings will last:
Investment Return: Higher returns extend the life of your portfolio, but pursuing them often requires taking on more investment risk (volatility).
Inflation: Inflation reduces the purchasing power of your money. A portfolio growing at 5% with 3% inflation only has a "real" growth rate of roughly 2%.
Sequence of Returns Risk: Experiencing a market crash early in retirement can devastate a portfolio, even if average returns over 30 years are good. This calculator assumes a constant average return, so it is wise to build a buffer.
Safe Withdrawal Rate Guidelines
While 4% is standard, many experts suggest a more dynamic approach based on market valuations and personal flexibility:
3.0% – 3.5%: Very conservative. Suitable for early retirees (FIRE) needing money to last 40-50+ years.
4.0% – 4.5%: The traditional safe zone for a standard 30-year retirement.
5.0%+: Generally considered risky unless you have other guaranteed income sources (like Social Security or a Pension) coming online soon to reduce the burden on the portfolio.
function calculateRetirement() {
// 1. Get input values
var portfolio = parseFloat(document.getElementById('totalPortfolio').value);
var annualSpend = parseFloat(document.getElementById('annualWithdrawal').value);
var returnRate = parseFloat(document.getElementById('returnRate').value);
var inflationRate = parseFloat(document.getElementById('inflationRate').value);
// 2. Validate inputs
if (isNaN(portfolio) || isNaN(annualSpend) || isNaN(returnRate) || isNaN(inflationRate)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (portfolio <= 0 || annualSpend <= 0) {
alert("Portfolio and Spending must be greater than zero.");
return;
}
// 3. Calculate Immediate Withdrawal Rate
var currentRate = (annualSpend / portfolio) * 100;
// 4. Calculate Real Return (Fisher Equation approximation for simplicity in code: (1+r)/(1+i) – 1)
var realReturnDecimal = ((1 + returnRate / 100) / (1 + inflationRate / 100)) – 1;
var realReturnPercent = realReturnDecimal * 100;
// 5. Calculate Years to Depletion (NPER logic)
// Formula: n = -ln(1 – (P * r / W)) / ln(1 + r)
// Where P = Portfolio, W = Annual Withdrawal, r = real return rate
var years = 0;
var infinite = false;
if (Math.abs(realReturnDecimal) = Spending, money never runs out
var sustainableWithdrawal = portfolio * realReturnDecimal;
if (sustainableWithdrawal >= annualSpend) {
infinite = true;
} else {
// Calculate finite years using logarithm formula for annuity
// Solve for n: Balance = 0
// This formula derives from sum of geometric series for withdrawals vs compound interest
var numerator = Math.log(1 – (annualSpend / portfolio) / realReturnDecimal); // Note: Since spend > sustainable, the term inside log is negative if we format wrong.
// Actually, correct NPER for drawing down:
// n = -ln(1 – (P * r / W)) / ln(1 + r)
// If W > P*r, the term (P*r/W) is < 1, so 1 – (P*r/W) is positive.
var termInside = 1 – (portfolio * realReturnDecimal / annualSpend);
if (termInside <= 0) {
// This mathematically shouldn't happen if we already checked sustainableWithdrawal Spending)";
statusClass = "status-safe";
commentary = "Excellent Position: Your investment returns (adjusted for inflation) exceed your annual spending. Your principal is theoretically safe forever.";
} else {
if (years > 100) {
displayYears = "100+ Years";
statusClass = "status-safe";
commentary = "Very Safe: Your savings are projected to last over a century.";
} else {
displayYears = years.toFixed(1) + " Years";
if (years < 15) {
statusClass = "status-danger";
commentary = "High Risk: Your savings may run out in less than 15 years. Consider reducing spending or increasing income.";
} else if (years < 25) {
statusClass = "status-warning";
commentary = "Caution: Your savings typically need to last 30+ years for a standard retirement. You are slightly below this threshold.";
} else {
statusClass = "status-safe";
commentary = "Safe Zone: Your portfolio is projected to last " + years.toFixed(1) + " years, which covers a standard retirement duration.";
}
}
}
// 7. Update DOM
document.getElementById('resRate').innerHTML = currentRate.toFixed(2) + "%";
var yearsEl = document.getElementById('resYears');
yearsEl.innerHTML = displayYears;
yearsEl.className = "result-value highlight-result " + statusClass;
document.getElementById('resRealReturn').innerHTML = realReturnPercent.toFixed(2) + "%";
document.getElementById('resCommentary').innerHTML = commentary;
// Show result box
document.getElementById('result-box').style.display = "block";
}