Retirement Withdrawal Calculator

How long will my money last in retirement?

Until the withdrawals use up the balance and everything it earns along the way. The calculator works this out one year at a time: it takes the year’s withdrawal, adds the return on what is left, and stops when a withdrawal can no longer be paid in full or after 100 years. With $600,000 at age 66, a first-year withdrawal of $33,000 that rises 2.5% a year, and a steady 5% return, the money pays 23 full years and part of the 24th, at age 89.

Turned around, it answers the other common question: the most you can withdraw each year so the money lasts a set number of years. Both answers assume one steady return, and the page shows how much the order of real returns can change them.

How to use the calculator

• Find: How long it lasts for a withdrawal you have in mind, or Most I can withdraw for a number of years.
• Starting balance: the savings you will draw from, in dollars. 600k and 1.2m work.
• Age at the start (optional): adds ages to the table and to the result.
• First-year withdrawal: what you take from savings in the first year. Enter only the part your savings must cover after Social Security, a pension or other income, which the calculator doesn’t model. Switch to % of the starting balance to test a withdrawal rate.
• Years of withdrawals (for Most I can withdraw): how long the money must last, 1 to 100 years.
• Expected annual return: the average yearly return you assume on the savings, after fund fees. It can be negative.
• Inflation rate: used for the amounts in today’s dollars, and to raise the withdrawal each year when Raise withdrawals with inflation each year is checked.
• Withdrawal timing: the start of each year, when the money you take out earns nothing that year, or the end.

The Try buttons load the cases worked through below: a 4% withdrawal rate, flat withdrawals, end-of-year timing and the most you can withdraw for 30 years. To weigh two plans, press Save for comparison, change the inputs and save again; each later scenario shows its change in years and dollars against the first.

How the calculation works

Each year’s withdrawal is the first-year amount raised once for every year that has passed. The balance then moves forward one year, with the withdrawal taken before or after that year’s growth:

$$W_t = W\,(1+g)^{t-1}$$ $$B_t = (B_{t-1} - W_t)(1+r) \quad \text{(start of year)} \qquad B_t = B_{t-1}(1+r) - W_t \quad \text{(end of year)}$$

• $B_0$ is the starting balance and $B_t$ the balance at the end of year $t$.
• $W$ is the first-year withdrawal and $W_t$ the withdrawal in year $t$.
• $r$ is the yearly return as a decimal (5% is 0.05).
• $g$ is the yearly raise: the inflation rate as a decimal when withdrawals rise with it, otherwise 0.

When a year’s withdrawal is more than the money available, that year gets what is left and the money has run out. If money is still left after 100 years, the calculator stops and says so. When the return is above the raise, the balance never runs out if it is at least $W(1+r) \div (r-g)$ with start-of-year withdrawals, or $W \div (r-g)$ with end-of-year ones: that is the value of a growing perpetuity, whose earnings pay every rising withdrawal.

Worked example: $600,000 at 66, withdrawing $33,000 a year

Example assumptions, not a forecast: a $600,000 balance, a first-year withdrawal of $33,000 (5.5% of the balance) that rises 2.5% a year with inflation, a steady 5% return, and withdrawals at the start of each year from age 66.

1. Year 1: ($600,000 − $33,000) × 1.05 = $595,350.00.
2. Year 2’s withdrawal is $33,000 × 1.025 = $33,825.00, so the balance becomes ($595,350.00 − $33,825.00) × 1.05 = $589,601.25.
3. The same step repeats. The withdrawal keeps growing while the shrinking balance earns less each year, and after year 23’s withdrawal and growth $31,532.73 is left.
4. Year 24, at age 89, is due $58,232.15, so it gets the remaining $31,532.73, about 54% of it. The money pays 23 full years and part of the 24th.
5. In all $1,040,818.83 is withdrawn, or $776,869.51 in today’s dollars: 23 years of $33,000 in today’s money plus $17,869.51 for year 24.

At a steady 5%, a balance of $33,000 × 1.05 ÷ (0.05 − 0.025) = $1,386,000 would have paid these rising withdrawals forever.

How much can I withdraw each year?

As much as the balance and its returns can pay for exactly the number of years you need. For the example’s $600,000 at a 5% return and 2.5% inflation, the most for 30 years is $27,757.03 in year 1 (4.63% of the balance, about $2,313.09 a month), rising to $56,802.19 in year 30. To find yours, choose Most I can withdraw and enter the number of years: the calculator finds the first-year withdrawal that, rising with inflation, uses up the balance in exactly that time.

Rising withdrawals valued at the return are worth the same as level withdrawals valued at the real rate $i = (1+r) \div (1+g) - 1$, so the answer is an annuity payment at that rate. With withdrawals at the start of each year, over $n$ years:

$$W = \frac{B_0\, i}{\left(1-(1+i)^{-n}\right)(1+i)}$$

With end-of-year withdrawals, drop the $(1+i)$ and multiply by $(1+g)$, because the first withdrawal comes a year later. When $i$ is 0 the payment is simply $B_0 \div n$. In the example $i$ = 1.05 ÷ 1.025 − 1 = 0.0243902, the annuity-due factor $\left(1-(1+i)^{-n}\right)(1+i) \div i$ is 21.616147, and $W$ = $600,000 ÷ 21.616147 = $27,757.03. In a spreadsheet, =PMT(1.05/1.025-1, 30, -600000, 0, 1) gives the same figure; the final 1 means payments at the start of each period.

If the withdrawals stay flat, $i$ is the return itself: $600,000 over 30 years at 5% supports $37,172.25 a year at the start of each year, or $39,030.86 at the end (=PMT(0.05, 30, -600000)).

Should withdrawals rise with inflation?

If your spending rises with prices, yes, because a flat withdrawal buys less every year. Uncheck Raise withdrawals with inflation each year in the example and the $600,000 lasts 41 full years instead of 23, with $5,545.10 left for year 42. At 2.5% inflation, though, the flat $33,000 is worth $18,701.01 in today’s dollars by year 24 and $12,290.21 by year 41. The Withdrawal (today’s $) column of the table shows this for every year; it divides each amount by 1.025 raised to the number of years since the start.

Testing a withdrawal rate such as 4%

Switch the withdrawal to % of the starting balance and type 4. The first year’s withdrawal is then 4% of the balance, and later years raise that dollar amount with inflation, which is how the “4% rule” is usually stated. In the example that is $24,000, and at a steady 5% return the $600,000 lasts 37 full years, with $32,081.46 left for year 38. The answer depends entirely on the return and inflation you enter; the calculator doesn’t judge whether a rate is safe, and the questions below explain where the 4% figure comes from.

Start or end of the year?

Withdrawing at the start of each year is the cautious assumption, because the money you take out earns nothing that year. With end-of-year withdrawals the example lasts 25 full years instead of 23, then $9,482.18 in year 26. Withdrawals spread over the year, such as monthly ones, fall between the two.

Why an average return can mislead: the order of returns

Real returns vary from year to year, and when poor years come early in retirement the money runs out sooner, even with the same average. A withdrawal taken after a loss has to sell more of a smaller balance, and what is sold isn’t there for the recovery. The calculator shows this with made-up returns for the first ten years that average your return exactly, in two orders, followed by your return every later year.

For the example’s 5%, the weak-years-first order (−21%, −11%, 4%, 11%, and so on) leaves $323,222.18 after year 10 and runs out in year 19, after 18 full withdrawals. The same ten returns with the weak years last give 24 full years, one more than a steady 5%. Both orders multiply to the same growth; they differ only in how much has already been withdrawn when the losses land. It is one pair of orders, not a probability: studies such as Bengen’s test withdrawal rates on actual historical sequences instead, and the guide to sequence-of-returns risk works through the effect in detail.

Reading the result

• Your money lasts is the number of full years of withdrawals, with the short final year and the age beside it; in the other mode, Most you can withdraw is the first-year amount. “More than 100 years” means money is still left when the calculator stops, and the steps say whether it would last forever.
• Total withdrawn adds up every withdrawal, also in today’s dollars.
• Last withdrawal is the short final year: $31,532.73 in the example, 54.2% of the $58,232.15 due.
• The year-by-year table lists each year’s start balance, withdrawal, growth and end balance, plus the withdrawal and balance in today’s dollars. Download it as a CSV file to keep working in a spreadsheet. The chart below it draws the balance both ways.
• Same average return, different order is the illustration above, as a table and a chart.
• Years the money lasts at other returns and withdrawals reruns the calculation with the return 1 and 2 points either side of yours and the first-year withdrawal 10% lower or higher. In the example, a 4% return cuts the 23 years to 20 and 6% stretches them to 27; withdrawing $36,300 instead of $33,000 cuts them to 20. For Most I can withdraw, the grid shows the withdrawal for 5 years fewer or more.

Assumptions and limitations

• One steady return every year. Real returns vary, and a poor first decade shortens how long the money lasts; the illustration shows one example, not the odds.
• One withdrawal a year, at the start or the end. A withdrawal raised with inflation rises by the same rate every year.
• Social Security, pensions, annuities and work income are not modeled; enter only what savings must cover.
• Taxes, required minimum distributions, early-withdrawal penalties and fees not already taken out of the return are not modeled.
• The calculation stops after 100 years.
• Balances and withdrawals are rounded to the cent only on screen, so a solved withdrawal, once rounded to the cent, can leave a few cents over, or short, at the end.
• The result is an educational estimate, not financial, tax or investment advice.

Common mistakes

• Entering total spending instead of the gap. If you spend $50,000 a year and Social Security pays $20,000, your savings must cover $30,000; enter that.
• Treating a flat withdrawal as a steady income. At 2.5% inflation, a flat $33,000 buys what $18,701.01 buys today by year 24.
• Assuming an optimistic return. A return 1 point too high adds years that may never come: in the example, 6% instead of 5% turns 23 years into 27. Try a lower one too.
• Forgetting tax on withdrawals from pre-tax accounts. The amount that leaves the account has to cover the tax as well as the spending.
• Typing the return as a decimal. The return field is in percent, so 0.05 means 0.05%; the calculator points this out.
• Reading “more than 100 years” as proof of safety. It only says the steady return you entered keeps up with the withdrawals.