Please enter valid positive numbers for Portfolio and Withdrawal.
Your Initial Withdrawal Rate
0.00%
Portfolio Longevity:0 Years
Adjusted for Inflation?Yes
Final Balance Status:–
function calculateWithdrawalMetrics() {
// Get Input Values
var portfolioStr = document.getElementById('portfolioValue').value;
var withdrawalStr = document.getElementById('annualWithdrawal').value;
var returnStr = document.getElementById('annualReturn').value;
var inflationStr = document.getElementById('inflationRate').value;
// Parse Inputs
var portfolio = parseFloat(portfolioStr);
var withdrawal = parseFloat(withdrawalStr);
var returnRate = parseFloat(returnStr) / 100;
var inflationRate = parseFloat(inflationStr) / 100;
// Validation
var errorDiv = document.getElementById('errorMsg');
var resultDiv = document.getElementById('resultBox');
if (isNaN(portfolio) || isNaN(withdrawal) || portfolio <= 0 || withdrawal <= 0) {
errorDiv.style.display = 'block';
resultDiv.style.display = 'none';
return;
}
// Default rates if empty
if (isNaN(returnRate)) returnRate = 0.05; // Default 5%
if (isNaN(inflationRate)) inflationRate = 0.03; // Default 3%
errorDiv.style.display = 'none';
resultDiv.style.display = 'block';
// 1. Calculate Initial Withdrawal Rate
var initialRate = (withdrawal / portfolio) * 100;
// 2. Simulation for Longevity
// We will simulate year by year up to 100 years.
// Logic: End Balance = (Start Balance – Withdrawal) * (1 + Return)
// Note: Withdrawal usually increases by inflation annually.
var currentBalance = portfolio;
var currentWithdrawal = withdrawal;
var years = 0;
var maxYears = 100;
var isDepleted = false;
// Loop simulation
// Assuming withdrawal is taken at the BEGINNING of the year for safety,
// then the remainder grows.
while (years < maxYears) {
currentBalance = currentBalance – currentWithdrawal;
if (currentBalance <= 0) {
isDepleted = true;
break;
}
// Grow the remainder
currentBalance = currentBalance * (1 + returnRate);
// Increase withdrawal for next year based on inflation
currentWithdrawal = currentWithdrawal * (1 + inflationRate);
years++;
}
// Output Formatting
document.getElementById('withdrawalRateResult').innerHTML = initialRate.toFixed(2) + "%";
var longevityText = "";
var statusText = "";
if (isDepleted) {
longevityText = years + " Years";
statusText = "Depleted";
document.getElementById('withdrawalRateResult').style.color = "#e67e22"; // Orange warning
if (years < 15) {
document.getElementById('withdrawalRateResult').style.color = "#c0392b"; // Red danger
}
} else {
longevityText = "100+ Years";
statusText = "Sustainable (Grow/Preserve)";
document.getElementById('withdrawalRateResult').style.color = "#27ae60"; // Green safe
}
document.getElementById('yearsLasting').innerHTML = longevityText;
document.getElementById('finalStatus').innerHTML = statusText;
}
Understanding Your Annual Withdrawal Rate
Calculating your annual withdrawal rate is one of the most critical steps in retirement planning. It determines the percentage of your investment portfolio you withdraw every year to cover living expenses. Getting this number right ensures that your savings last throughout your retirement, balancing the need for income with the necessity of preserving capital against inflation and market fluctuations.
What is the Withdrawal Rate Formula?
The basic formula for calculating your initial withdrawal rate is straightforward:
For example, if you have a portfolio of $1,000,000 and you plan to withdraw $40,000 in the first year, your withdrawal rate is 4%. However, the complexity arises when projecting this over 30+ years, accounting for inflation and investment returns, which our calculator handles for you.
The 4% Rule Explained
The "4% Rule" is a common rule of thumb in retirement planning. It suggests that a retiree can safely withdraw 4% of their initial portfolio value in the first year of retirement, and then adjust that dollar amount for inflation in subsequent years. Historically, this strategy has provided a high probability that the portfolio will last for at least 30 years.
Safe Rate: Generally considered 3% to 4%.
Risky Rate: Withdrawals exceeding 5% significantly increase the risk of portfolio depletion, especially if the market performs poorly early in retirement.
Dynamic Spending: Some retirees choose to adjust their withdrawal rate annually based on market performance rather than taking a fixed inflation-adjusted amount.
How Inflation Affects Your Portfolio
Inflation is the silent erosion of purchasing power. If you withdraw a fixed $40,000 every year for 20 years, that $40,000 will buy significantly less in year 20 than in year 1. To maintain your standard of living, your withdrawal amount must increase annually by the rate of inflation.
This calculator simulates this reality. If you input a 3% inflation rate, the calculator increases your withdrawal amount by 3% every year in its background logic to determine how long your money will truly last.
Sequence of Returns Risk
When using this calculator, it is important to remember that average returns (e.g., 7%) are rarely smooth. "Sequence of returns risk" refers to the danger of experiencing negative market returns early in your retirement. If your portfolio drops by 20% in the first two years while you are also withdrawing money, your capital depletes much faster than if those drops occurred later. To mitigate this, many advisors suggest a lower withdrawal rate or holding a cash buffer.
Using the Calculator Results
1. Current Withdrawal Rate: This is your baseline. If it is above 4-5%, consider if you can reduce expenses or work part-time. 2. Portfolio Longevity: This estimates how many years your money will last. A result of "100+ Years" usually indicates that your growth rate exceeds your withdrawal rate, potentially allowing your principal to grow indefinitely. 3. Final Status: Indicates if the portfolio is depleted or if it is sustainable (preserving capital).