Retirement Spend Down Calculator

Retirement Spend Down Calculator

Estimate how long your retirement portfolio will last based on your withdrawal strategy and market expectations.

Projection Summary

Understanding Your Retirement Spend Down

Planning for retirement isn't just about accumulating wealth; it's about the strategic distribution of that wealth. A "spend down" strategy dictates how you will liquidate assets to fund your lifestyle once your primary income stops. This calculator helps you visualize the intersection of your withdrawal needs, inflation, and investment growth.

Key Factors in the Calculation

• Inflation Adjustment: To maintain your purchasing power, your annual withdrawal typically needs to increase each year. If inflation is 3%, your $40,000 withdrawal this year needs to be $41,200 next year.
• Real Rate of Return: This is your portfolio's growth minus the inflation rate. If your portfolio grows at 5% but inflation is 3%, your "real" growth is approximately 2%.
• Sequence Risk: While this calculator uses a steady average return, real-world markets fluctuate. A "down" market in your early retirement years can significantly impact how long your money lasts.

Example Scenario

Consider a retiree with $1,000,000 who wishes to withdraw $40,000 annually (the classic 4% rule). If the portfolio grows at 6% and inflation is 3%, the money could last over 40 years because the initial withdrawal is relatively low compared to the expected growth. However, if that same retiree withdraws $60,000 (6%) in a 4% growth environment, the portfolio might be exhausted in less than 20 years.

function calculateSpendDown() { var balance = parseFloat(document.getElementById('currentPortfolio').value); var annualWithdrawal = parseFloat(document.getElementById('initialWithdrawal').value); var years = parseInt(document.getElementById('yearsDuration').value); var growthRate = parseFloat(document.getElementById('portfolioReturn').value) / 100; var inflation = parseFloat(document.getElementById('inflationRate').value) / 100; var resultDiv = document.getElementById('spendDownResult'); var resultContent = document.getElementById('resultContent'); if (isNaN(balance) || isNaN(annualWithdrawal) || isNaN(years) || isNaN(growthRate) || isNaN(inflation)) { alert('Please enter valid numerical values in all fields.'); return; } var currentBalance = balance; var currentWithdrawal = annualWithdrawal; var yearReached = 0; var totalWithdrawn = 0; var ranOut = false; for (var i = 1; i = currentWithdrawal) { currentBalance -= currentWithdrawal; totalWithdrawn += currentWithdrawal; // Remaining balance grows currentBalance = currentBalance * (1 + growthRate); // Next year's withdrawal adjusts for inflation currentWithdrawal = currentWithdrawal * (1 + inflation); yearReached = i; } else { // Not enough left for a full withdrawal totalWithdrawn += currentBalance; currentBalance = 0; ranOut = true; break; } } var statusColor = ranOut ? "#e74c3c" : "#27ae60"; var finalSummary = ""; if (ranOut) { finalSummary = "Warning: Your savings are projected to run out in year " + yearReached + "."; } else { finalSummary = "Success: Your portfolio is projected to last the full " + years + " years."; } finalSummary += ""; finalSummary += ""; finalSummary += ""; finalSummary += ""; finalSummary += "

Ending Balance:	$" + currentBalance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "
Total Amount Withdrawn:	$" + totalWithdrawn.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "
Final Year Annual Withdrawal:	$" + currentWithdrawal.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + "

"; resultContent.innerHTML = finalSummary; resultDiv.style.display = 'block'; }