Retirement Withdrawal Calculator

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Retirement Withdrawal Calculator
How long will my money last?How much can I withdraw annually?Starting balance needed
Result:
Your funds will last:
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How to Use the Retirement Withdrawal Calculator

Planning for retirement requires understanding the relationship between your total savings, how much you spend each year, and how long those funds will support your lifestyle. This retirement withdrawal calculator is designed to help you solve for the most critical variables in your financial plan.

By adjusting for inflation and expected investment returns, you can model different scenarios to ensure you don't outlive your money.

Current Savings Balance
The total amount of liquid assets you have available for retirement, such as 401(k)s, IRAs, and brokerage accounts.
Annual Withdrawal Amount
The amount of money you intend to take out of your portfolio each year to cover living expenses.
Expected Annual Return
The average percentage growth you expect from your investments. Typical retirement portfolios range from 4% to 7% depending on asset allocation.
Inflation Adjustment
Checking this box adjusts the withdrawal amount upward by 3% annually to maintain purchasing power as prices rise.

How the Retirement Withdrawal Formula Works

This calculator uses the formula for the present value of an ordinary annuity or the future value of a declining balance. The core math relies on compounding interest applied to the remaining balance after each withdrawal.

Withdrawal = (P × r × (1+r)^n) / ((1+r)^n – 1)

  • P = Principal (Starting Balance)
  • r = Interest Rate (adjusted for inflation if selected)
  • n = Number of periods (years)

When solving for "How long will my money last?", the calculator uses a logarithmic function to determine the point where the balance reaches zero based on the burn rate versus the growth rate.

Retirement Withdrawal Example

Example: A retiree has $1,000,000 in savings and wants to withdraw $50,000 per year. They expect a 5% annual return on their investments and want to know how long the money will last with a 3% inflation adjustment.

Step-by-step solution:

  1. Initial Balance: $1,000,000
  2. Withdrawal: $50,000
  3. Nominal Rate: 5%
  4. Inflation Rate: 3%
  5. Real Rate: 5% – 3% = 2%
  6. Calculation: Using the annuity formula for 'n', the funds would last approximately 25.8 years.

Common Questions about Retirement Withdrawals

What is the 4% rule?

The 4% rule is a popular guideline suggesting that if you withdraw 4% of your initial retirement portfolio in the first year and adjust that amount for inflation thereafter, your money should last 30 years. This retirement withdrawal calculator allows you to test the 4% rule against your own expected returns and balances.

Should I include taxes in my withdrawal amount?

Yes. If your savings are in a traditional 401(k) or IRA, withdrawals are taxed as ordinary income. You should calculate your withdrawal amount based on your "gross" need (the amount you need to take out to cover both taxes and living expenses).

How does inflation affect my retirement?

Inflation reduces the purchasing power of your dollar. If you withdraw a fixed $40,000 every year for 20 years, that $40,000 will buy significantly less in year 20 than it did in year 1. Always consider using the "Inflation Adjustment" feature to see the impact on your portfolio's longevity.

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