Enter your details and click "Calculate Sustainability" to see the results.
Understanding Your Retirement Withdrawal Sustainability
Planning for retirement involves not only accumulating savings but also understanding how long those savings will last. A retirement withdrawal calculator helps you project the longevity of your nest egg based on several key factors. This tool is crucial for making informed decisions about your spending in retirement, your investment strategy, and potential adjustments needed to ensure financial security throughout your post-working life.
How the Calculator Works
The Retirement Withdrawal Calculator estimates the sustainability of your retirement funds by simulating the growth of your savings and then deducting your planned withdrawals until your funds are depleted or you reach your projected life expectancy. Here's a breakdown of the inputs and the underlying logic:
Current Age: Your age today. This helps determine the number of years until retirement.
Desired Retirement Age: The age at which you plan to stop working and begin drawing from your retirement savings.
Current Retirement Savings: The total amount of money you have saved specifically for retirement at this moment.
Annual Contribution: The amount you plan to save and contribute to your retirement accounts each year until you retire.
Expected Annual Investment Return: The average annual percentage gain you anticipate from your investments (e.g., stocks, bonds, mutual funds). This is a crucial variable as even small differences in returns can significantly impact long-term outcomes.
Desired Annual Withdrawal: The amount of money you plan to withdraw from your savings each year during retirement to cover your living expenses.
Life Expectancy: The age you anticipate living to. This helps determine the total duration for which your retirement funds need to last.
The Calculation Logic (Simplified Simulation)
The calculator simulates your finances year by year:
Pre-Retirement Phase: From your current age to your desired retirement age, it calculates the future value of your current savings and adds your annual contributions, compounded by the expected annual return.
Retirement Phase: Once you reach retirement age, it subtracts your desired annual withdrawal from the accumulated savings. It then applies the expected annual return to the remaining balance, and this cycle repeats for each year of retirement until your savings are exhausted or you reach your life expectancy.
The output indicates whether your savings are projected to last throughout your retirement based on these inputs. It might also suggest how many years your savings are projected to last.
Example Scenario:
Let's consider Sarah, who is 50 years old. She plans to retire at 65. She currently has $750,000 saved and contributes $15,000 annually. She expects an average annual return of 6% and wants to withdraw $50,000 per year in retirement. Sarah anticipates living until she is 95.
Current Age: 50
Desired Retirement Age: 65
Current Retirement Savings: $750,000
Annual Contribution: $15,000
Expected Annual Investment Return: 6%
Desired Annual Withdrawal: $50,000
Life Expectancy: 95
Using the calculator with these figures would help Sarah understand if her $50,000 annual withdrawal is sustainable for the 30 years she expects to be in retirement (from age 65 to 95), considering her savings growth and contributions until retirement.
Key Considerations:
Inflation: This basic calculator does not account for inflation, which erodes purchasing power over time. Your desired annual withdrawal in the future will need to be higher to maintain the same lifestyle.
Variable Returns: Investment returns are not guaranteed and can fluctuate significantly. Averages are used, but actual results may vary.
Taxes: Withdrawals from retirement accounts are often taxable. This calculator does not factor in tax implications.
Unexpected Expenses: Healthcare costs or other unforeseen events can significantly impact your withdrawal needs.
This calculator serves as an excellent starting point for retirement planning. For a comprehensive financial plan, it's advisable to consult with a qualified financial advisor.
function calculateWithdrawal() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var retirementAge = parseFloat(document.getElementById("retirementAge").value);
var currentSavings = parseFloat(document.getElementById("currentSavings").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var expectedAnnualReturn = parseFloat(document.getElementById("expectedAnnualReturn").value) / 100;
var desiredAnnualWithdrawal = parseFloat(document.getElementById("desiredAnnualWithdrawal").value);
var lifeExpectancy = parseFloat(document.getElementById("lifeExpectancy").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = 'Please enter valid numbers for all fields.'; // Default error message
// Input validation
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentSavings) || isNaN(annualContribution) || isNaN(expectedAnnualReturn) || isNaN(desiredAnnualWithdrawal) || isNaN(lifeExpectancy) ||
currentAge < 0 || retirementAge < 0 || currentSavings < 0 || annualContribution < 0 || expectedAnnualReturn < 0 || desiredAnnualWithdrawal < 0 || lifeExpectancy < 0 ||
retirementAge < currentAge) {
resultElement.innerHTML = 'Invalid input. Please ensure all values are positive numbers and retirement age is not less than current age.';
return;
}
var yearsToRetirement = retirementAge – currentAge;
var retirementDuration = lifeExpectancy – retirementAge;
if (yearsToRetirement < 0) {
resultElement.innerHTML = 'Retirement age cannot be before current age.';
return;
}
if (retirementDuration <= 0) {
resultElement.innerHTML = 'Life expectancy must be greater than retirement age.';
return;
}
var futureSavings = currentSavings;
// Calculate savings growth until retirement
for (var i = 0; i < yearsToRetirement; i++) {
futureSavings = futureSavings * (1 + expectedAnnualReturn) + annualContribution;
}
var remainingSavings = futureSavings;
var yearsCanWithdraw = 0;
// Simulate withdrawals during retirement
for (var i = 0; i < retirementDuration; i++) {
if (remainingSavings = retirementDuration) {
outputHTML = "Your savings are projected to last for your entire retirement (" + retirementDuration + " years).";
} else {
outputHTML = "Your savings are projected to last for " + yearsCanWithdraw + " years, potentially falling short of your life expectancy of " + lifeExpectancy + ".";
}
outputHTML += "Projected savings at retirement: $" + futureSavings.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "";
outputHTML += "Remaining savings at life expectancy (" + lifeExpectancy + " years): $" + Math.max(0, remainingSavings).toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + "";
resultElement.innerHTML = outputHTML;
}