Estimate retirement income using dynamic spending rules (Ceiling & Floor).
Please enter valid numerical values for all fields.
Initial Annual Withdrawal
–
Total Withdrawn
–
Final Portfolio Value
–
Annual Schedule
Year
Start Portfolio
Withdrawal Amount
End Portfolio
function calculateVariableWithdrawal() {
// Get Inputs
var initialPortfolio = parseFloat(document.getElementById('initialPortfolio').value);
var targetRate = parseFloat(document.getElementById('targetWithdrawalRate').value) / 100;
var annualReturn = parseFloat(document.getElementById('annualReturn').value) / 100;
var inflation = parseFloat(document.getElementById('inflationRate').value) / 100;
var ceilingPct = parseFloat(document.getElementById('ceilingPct').value) / 100;
var floorPct = parseFloat(document.getElementById('floorPct').value) / 100;
var years = parseInt(document.getElementById('durationYears').value);
var errorMsg = document.getElementById('errorMsg');
var resultsArea = document.getElementById('resultsArea');
// Validation
if (isNaN(initialPortfolio) || isNaN(targetRate) || isNaN(annualReturn) ||
isNaN(inflation) || isNaN(ceilingPct) || isNaN(floorPct) || isNaN(years)) {
errorMsg.style.display = 'block';
resultsArea.style.display = 'none';
return;
}
errorMsg.style.display = 'none';
resultsArea.style.display = 'block';
// Calculation Logic
var currentPortfolio = initialPortfolio;
var previousWithdrawal = 0;
var totalWithdrawn = 0;
var htmlRows = ";
// Formatter
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 0,
maximumFractionDigits: 0
});
for (var i = 1; i <= years; i++) {
var yearStartPortfolio = currentPortfolio;
var actualWithdrawal = 0;
if (yearStartPortfolio maxWithdrawal) {
actualWithdrawal = maxWithdrawal;
} else if (idealWithdrawal yearStartPortfolio) {
actualWithdrawal = yearStartPortfolio;
}
}
// Update Portfolio for next year
// Withdraw first, then grow the remainder
var remaining = yearStartPortfolio – actualWithdrawal;
var growth = remaining * annualReturn;
currentPortfolio = remaining + growth;
// Store data
totalWithdrawn += actualWithdrawal;
previousWithdrawal = actualWithdrawal;
// Generate Table Row
htmlRows += '
';
htmlRows += '
' + i + '
';
htmlRows += '
' + formatter.format(yearStartPortfolio) + '
';
htmlRows += '
' + formatter.format(actualWithdrawal) + '
';
htmlRows += '
' + formatter.format(currentPortfolio) + '
';
htmlRows += '
';
// Set Initial Withdrawal Display
if (i === 1) {
document.getElementById('valInitialWithdrawal').innerText = formatter.format(actualWithdrawal);
}
}
// Final Outputs
document.getElementById('valTotalWithdrawn').innerText = formatter.format(totalWithdrawn);
document.getElementById('valFinalPortfolio').innerText = formatter.format(currentPortfolio);
document.getElementById('scheduleBody').innerHTML = htmlRows;
}
What is a Variable Withdrawal Rate Strategy?
A Variable Withdrawal Rate strategy adjusts the amount of money a retiree spends each year based on the actual performance of their investment portfolio. Unlike static strategies, such as the famous "4% Rule" which adjusts withdrawals solely for inflation regardless of market conditions, a variable strategy reacts to market highs and lows.
This approach aims to solve two major risks in retirement planning:
Sequence of Returns Risk: Depleting the portfolio too early due to bad market returns in the first few years of retirement.
Underspending Risk: Living too frugally and leaving behind a massive unintended inheritance because the market performed better than expected.
How This Calculator Works
This calculator simulates a "Ceiling and Floor" variable spending strategy. It determines your annual income using the following logic:
It calculates a "Target Withdrawal" based on your current portfolio value and your target percentage (e.g., 4%).
It compares this new target to your previous year's withdrawal (adjusted for inflation).
The Ceiling: If the portfolio did very well, the calculator limits your raise. You cannot increase spending by more than the "Spending Ceiling" percentage above inflation. This banks profits for future bad years.
The Floor: If the portfolio dropped, the calculator limits your pay cut. You will not reduce spending by more than the "Spending Floor" percentage. This prevents drastic lifestyle changes.
Understanding the Inputs
Target Withdrawal Rate: The percentage of the portfolio value you aim to withdraw annually (e.g., 4.0% or 5.0%).
Spending Ceiling (% Increase Cap): The maximum percentage you are willing to increase your spending in a good year (beyond inflation). A lower number saves more surplus for bad years.
Spending Floor (% Decrease Limit): The maximum percentage you are willing to cut your spending in a bad year. For example, if set to 0%, you never take a pay cut in nominal terms, though inflation may erode purchasing power. If set to 5%, you accept up to a 5% cut to preserve portfolio longevity.
Why Use a Variable Strategy?
Research suggests that being flexible with spending allows retirees to start with a slightly higher initial withdrawal rate. By agreeing to cut spending slightly during bear markets (The Floor), you significantly reduce the probability of running out of money compared to a rigid inflation-adjusted withdrawal plan.