How to use this calculator
- Enter your Savings today.
- Set the Monthly withdrawal you plan to take out in the first year.
- Add the Annual return you expect on the remaining balance and the Withdrawal increase per year, which stands in for inflation.
- Read Your money lasts, the first-year withdrawal rate and the sustainable 30-year amount, and check the year-by-year table.
How the balance is projected
Each month the balance first earns that month's share of the annual return, then your withdrawal is taken out. Once a year the withdrawal is raised by the percentage you entered, so spending keeps pace with rising prices. The loop stops when the balance reaches zero.
Bₘ = Bₘ₋₁ × (1 + i) − Wₘ- Bₘ = balance after month m
- i = monthly return, (1 + annual return)^(1/12) − 1
- Wₘ = withdrawal in month m, raised by the yearly increase every 12 months
The "sustainable" figure is the level monthly payment that would use up the balance in exactly 360 months at your return, with no yearly increase.
Example: $400,000 and $2,500 a month
With a 5% return and withdrawals rising 2.5% a year, $400,000 lasts 197 months, about 16 years and five months. The first-year withdrawal rate is 7.5% of the starting balance, which is high.
Cut the withdrawal to $2,000 and the money lasts 261 months, over 21 years. Lower the return to 3% with $2,500 and it lasts only 168 months. A flat withdrawal (0% increase) stretches the original case to 260 months, which shows how much rising spending costs.
Reading the sustainable amount
For the same $400,000 at 5%, a level withdrawal of about $2,120 a month would last 30 years. That equals roughly 6.4% of the balance a year, but it is flat in dollars. If your spending must rise with prices, the safe first-year amount is lower.
Compare your plan with that number. If you withdraw well above it, expect to run short unless returns are high or you earn other income later.
How to use the result
Test returns lower than you hope. A bad market in the first years of withdrawals hurts more than the same loss later, because you are selling while prices are down. Try a 3% case as a stress test.
To plan the build-up phase use the retirement calculator or the FIRE calculator. To turn a lump sum into fixed payments, the annuity payout calculator does the arithmetic directly.
Ways to make savings last longer
- Lower the first-year withdrawal; it has the biggest effect.
- Delay or reduce withdrawals in years when markets fall.
- Add other income such as a pension, part-time work or rental income.
- Keep investment fees low so more of the return stays in the account.
Assumptions and limits
The return is a constant yearly average, while real returns vary and the order of good and bad years matters. Taxes, fees, one-off expenses and pensions are not modelled, and the projection stops at 100 years. Use it as a rough guide and discuss a withdrawal plan with a qualified adviser.
Frequently asked questions
How much can I withdraw each month without running out?
It depends on your balance, return and time horizon. The sustainable 30-year figure in the results is a starting point; use a lower amount if you want a margin of safety.
What does the withdrawal increase per year do?
It raises your monthly withdrawal once every 12 months, which models spending that rises with inflation.
Why does a small return change make such a difference?
The balance compounds while you are withdrawing from it, so a lower return both earns less and shortens the time the withdrawals can be funded.
What does it mean when it says the money lasts more than 100 years?
The returns cover your withdrawals, so the balance never reaches zero in the projection period.