Investment Withdrawal Calculator

Investment Withdrawal Calculator

Projection Results

function calculateWithdrawal() { var balance = parseFloat(document.getElementById('portfolioBalance').value); var monthlyWithdrawal = parseFloat(document.getElementById('withdrawalAmount').value); var annualReturn = parseFloat(document.getElementById('annualReturn').value) / 100; var inflation = parseFloat(document.getElementById('inflationRate').value) / 100; if (isNaN(balance) || isNaN(monthlyWithdrawal) || isNaN(annualReturn) || isNaN(inflation)) { alert("Please enter valid numeric values in all fields."); return; } var currentBalance = balance; var currentMonthlyWithdrawal = monthlyWithdrawal; var months = 0; var totalWithdrawn = 0; var maxMonths = 1200; // 100 year cap to prevent infinite loops var monthlyReturnRate = Math.pow(1 + annualReturn, 1/12) – 1; var monthlyInflationRate = Math.pow(1 + inflation, 1/12) – 1; while (currentBalance > 0 && months < maxMonths) { // Apply return currentBalance = currentBalance * (1 + monthlyReturnRate); // Subtract withdrawal if (currentBalance = maxMonths && currentBalance > 0) { timeResult.innerHTML = "Your portfolio is sustainable for 100+ years!"; totalWithdrawnEl.innerHTML = "Projected balance is still growing based on your return rate."; finalMessage.innerHTML = "Note: If your rate of return exceeds your withdrawal and inflation rate, your money may last indefinitely."; } else { timeResult.innerHTML = "Your funds will last approximately " + years + " years and " + remainingMonths + " months."; totalWithdrawnEl.innerHTML = "Total amount withdrawn over time: $" + totalWithdrawn.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + ""; finalMessage.innerHTML = "Calculation accounts for monthly compounding returns and monthly inflation adjustments to your withdrawals."; } }

Understanding the Investment Withdrawal Calculation

Planning for retirement or a long-term sabbatical requires a clear understanding of how long your principal capital will last. This Investment Withdrawal Calculator helps you visualize the longevity of your portfolio by factoring in market returns, withdrawal amounts, and the eroding power of inflation.

Key Input Factors

• Initial Portfolio Balance: The total sum of investable assets you are starting with today.
• Monthly Withdrawal Amount: The amount of cash you need to extract from your portfolio every month to cover living expenses.
• Expected Annual Return: The average yearly growth rate of your investments (stocks, bonds, or real estate).
• Annual Inflation Adjustment: This is critical. It increases your monthly withdrawal amount each year to ensure your purchasing power remains constant as prices rise.

Real-World Example

Imagine a retiree with a $1,000,000 portfolio. They want to withdraw $4,000 per month to live on. They expect a conservative 5% annual return and want to account for a 3% inflation rate.

In this scenario, the calculator doesn't just subtract $4,000 from $1,000,000. It calculates the growth of the remaining balance every month while simultaneously increasing that $4,000 withdrawal by a fraction every month to keep up with the 3% annual inflation. Without inflation, the money might last 40 years; with inflation, it might only last 25 years. This highlights why including inflation is vital for realistic financial planning.

The "Forever" Scenario

If your "Expected Annual Return" is significantly higher than your withdrawal percentage and inflation rate combined, you may find that the calculator indicates your funds will last 100+ years. This is often referred to as a "perpetual portfolio," where the growth of the assets exceeds the amount being taken out, allowing the principal to stay intact or even grow over time.

Expert Tip: The 4% Rule

Many financial planners reference the "4% Rule," which suggests that withdrawing 4% of your initial portfolio value in the first year (and adjusting for inflation thereafter) gives you a high probability of your money lasting 30 years. Use this calculator to test if the 4% rule holds up against your specific return expectations.