Calculate how long your assets will last given your current balance, monthly withdrawals, and expected annual growth rate.
Understanding the Spend Down Calculator
A Spend Down Calculator is a crucial financial planning tool designed to help individuals, particularly those in retirement or managing large inheritances, estimate how long their assets will last when they begin withdrawing from them. It models the depletion of an asset pool over time, taking into account regular withdrawals and the potential growth of the remaining balance.
How the Calculation Works
The core of this calculator involves an iterative process that simulates the balance of your assets month by month. Here's a breakdown of the logic:
Starting Point: The calculation begins with your specified Current Asset Balance and the selected Start Date.
Monthly Growth Rate: The Estimated Annual Growth Rate is converted into a monthly rate. If the annual rate is 5%, the monthly rate is approximately 5% / 12 = 0.4167%.
Monthly Simulation: In each step of the simulation (representing one month):
The current asset balance is first increased by the calculated monthly growth.
Balance = Balance * (1 + MonthlyGrowthRate)
Then, your Estimated Monthly Withdrawal is subtracted from the balance.
Balance = Balance - MonthlyWithdrawal
Duration Tracking: A counter tracks the number of months that have passed.
Termination Conditions: The simulation continues until one of two conditions is met:
The asset balance drops to or below zero, indicating the funds have been depleted.
A predefined maximum number of months (e.g., 600 months, or 50 years) is reached to prevent infinite loops in scenarios where assets might not deplete.
Result: The calculator outputs the total number of months the assets lasted. This is then converted into years and months for easier interpretation. The end date is also calculated based on the start date and the duration.
Key Inputs Explained
Current Asset Balance ($): The total amount of money or value of assets you currently have available to spend down.
Estimated Monthly Withdrawal ($): The average amount you plan to withdraw from your assets each month. This should account for living expenses, healthcare, and any other costs.
Estimated Annual Growth Rate (%): The average annual return you expect your remaining assets to generate through investments. This is a crucial assumption and can significantly impact the duration. Using a conservative estimate is often recommended.
Start Date: The date from which you intend to begin your withdrawals. This helps in calculating the projected end date when assets are depleted.
Use Cases
Retirement Planning: Estimate how long retirement savings will last, especially when combined with pensions or other income sources.
Managing Inheritances: Determine the longevity of a lump sum inheritance when supplementing income or covering specific financial goals.
Financial Goal Setting: Understand the timeline for achieving financial independence or funding long-term projects through asset depletion.
Estate Planning: Projecting the distribution of assets over time for beneficiaries.
Disclaimer: This calculator provides an estimate based on the inputs provided. Actual results may vary due to market fluctuations, changes in spending habits, inflation, taxes, and unforeseen expenses. It is recommended to consult with a qualified financial advisor for personalized planning.
function calculateSpendDown() {
var currentBalance = parseFloat(document.getElementById("currentBalance").value);
var monthlyWithdrawal = parseFloat(document.getElementById("monthlyWithdrawal").value);
var annualGrowthRate = parseFloat(document.getElementById("annualGrowthRate").value);
var startDateInput = document.getElementById("startDate").value;
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
// Input Validation
if (isNaN(currentBalance) || currentBalance < 0) {
resultDiv.innerHTML = 'Please enter a valid positive current asset balance.';
return;
}
if (isNaN(monthlyWithdrawal) || monthlyWithdrawal <= 0) {
resultDiv.innerHTML = 'Please enter a valid positive monthly withdrawal amount.';
return;
}
if (isNaN(annualGrowthRate) || annualGrowthRate 0 && months 0) { // Only increment months if balance is still positive after withdrawal
months++;
} else {
// If balance becomes non-positive *after* withdrawal, this month is the last month of funds.
// However, we only count full months of withdrawals that were possible.
// If the balance was sufficient for the withdrawal, we count this month.
// The loop condition `balance > 0` will handle breaking out correctly.
// If balance became = monthlyWithdrawal),
// this month counts.
if (balance + monthlyWithdrawal >= monthlyWithdrawal) { // Checks if withdrawal was possible
months++;
}
break; // Exit loop if balance is depleted or goes negative
}
}
var years = Math.floor(months / 12);
var remainingMonths = months % 12;
var endDate = null;
if (months > 0) {
var startDate = new Date(startDateInput);
startDate.setMonth(startDate.getMonth() + months);
endDate = startDate.toLocaleDateString('en-US', { year: 'numeric', month: 'long', day: 'numeric' });
}
if (months >= maxMonths) {
resultDiv.innerHTML = `Assets may not deplete within ${maxMonths / 12} years based on these assumptions.Continuing simulation…`;
} else if (months === 0 && currentBalance > 0) {
// This case happens if the first withdrawal exceeds the balance + growth for the first month.
// The loop condition `balance > 0` handles this, but we can refine the message.
// If the initial balance is less than the monthly withdrawal, it won't last even one full month.
// Check if the balance was sufficient for even one withdrawal.
if (currentBalance >= monthlyWithdrawal) {
resultDiv.innerHTML = `Assets lasted for ${months} months.A full month of withdrawals was not possible.`;
} else {
resultDiv.innerHTML = `Assets lasted for 0 months.Initial balance is less than the first monthly withdrawal.`;
}
}
else if (months > 0) {
resultDiv.innerHTML = `Assets will last for ${years} years and ${remainingMonths} months.Projected depletion date: ${endDate}`;
} else {
resultDiv.innerHTML = 'Calculation resulted in zero duration. Please check inputs.';
}
}