Retirement Withdrawal Calculator
Use this calculator to estimate how long your retirement savings might last, or what your remaining balance could be, based on your planned annual withdrawals, investment returns, and inflation.
Year-by-Year Simulation:
| Year | Start Balance | Inflation-Adj. Withdrawal | Balance After Withdrawal | Balance After Growth |
|---|---|---|---|---|
| " + year + " | $" + currentBalance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + " | "; if (currentBalance < withdrawalForThisYear) { ranOut = true; yearFundsRanOut = year; simulationDetails += "Funds ran out this year! | $" + withdrawalForThisYear.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + " | "; simulationDetails += "$" + balanceAfterWithdrawal.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + " | "; simulationDetails += "$" + currentBalance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + " | "; } simulationDetails += "
Understanding Retirement Withdrawals
Planning your retirement withdrawals is a critical step in ensuring your financial security throughout your golden years. This calculator helps you visualize the impact of various factors on the longevity of your retirement nest egg.
Key Factors Explained:
- Initial Retirement Savings: This is the total amount you have accumulated in your retirement accounts (e.g., 401k, IRA, brokerage accounts) at the point you begin withdrawing. The larger this sum, the more flexibility you generally have.
- Desired Annual Withdrawal (in today's $): This is the amount of money you wish to withdraw from your savings each year, expressed in current dollar terms. The calculator will adjust this amount for inflation in subsequent years to maintain your purchasing power.
- Expected Annual Investment Return (%): This represents the average annual growth rate you anticipate your investments will achieve during your retirement. It's crucial to use a realistic, conservative estimate, as market performance can be unpredictable.
- Expected Annual Inflation Rate (%): Inflation erodes the purchasing power of money over time. This rate accounts for how much more money you'll need each year to buy the same goods and services. The calculator uses this to adjust your annual withdrawal amount.
- Number of Retirement Years to Plan For: This is your estimated retirement horizon – how many years you expect your savings to support you. This often depends on your age at retirement and life expectancy.
How it Works:
The calculator simulates your retirement year by year. Each year, it first adjusts your desired withdrawal for inflation, then subtracts that amount from your current balance. The remaining balance then grows by your expected annual investment return. This process repeats until either your funds run out or you reach your specified retirement duration.
Important Considerations:
- The "4% Rule": A common guideline suggests withdrawing about 4% of your initial retirement savings in the first year, and then adjusting that amount for inflation in subsequent years. This strategy aims to make your savings last for 30 years. Our calculator allows you to test different withdrawal percentages.
- Market Volatility: This calculator uses an average expected return. In reality, market returns fluctuate, which can significantly impact your portfolio's longevity, especially early in retirement (sequence of returns risk).
- Longevity Risk: People are living longer. It's wise to plan for a longer retirement than you might initially expect.
- Taxes: Withdrawals from pre-tax retirement accounts (like traditional 401k/IRA) are subject to income tax, which is not factored into this calculator. Consider the impact of taxes on your net withdrawal amount.
- Other Income Sources: This calculator focuses solely on withdrawals from savings. Remember to factor in other income sources like Social Security, pensions, or part-time work.
This calculator provides a projection and should be used for informational purposes only. For personalized financial advice, consult with a qualified financial planner.