Withdrawal Rate Calculator
Test how long your portfolio lasts at different safe withdrawal rates. All calculations happen locally — nothing leaves your browser.
What is a safe withdrawal rate? A safe withdrawal rate is the percentage of your starting portfolio you take in the first year of retirement, increased with inflation every year afterwards, that the balance can sustain without running out. The best-known figure is 4%, which means $40,000 a year from $1,000,000 — and it comes from research into 30-year retirements, not indefinite ones.
How to Use the Withdrawal Rate Calculator
- Enter your portfolio value — Count only invested assets you would genuinely draw on. Leave out home equity and your cash emergency fund, since neither is part of the balance this simulation spends down.
- Set a withdrawal rate — This is the percentage taken in year one only. Every later withdrawal is that same dollar amount adjusted upward for inflation, not a fresh percentage of a changed balance.
- Choose a retirement duration — Thirty years is the horizon the classic research covered. Retiring at 45 or 50 means planning for 40 to 50, and the Status card compares your chosen duration against how long the money actually lasts.
- Adjust the return and inflation assumptions — Enter the nominal return here, not a real one — the model grows the balance at your return and raises the withdrawal by inflation separately, so subtracting inflation yourself would double-count it.
- Read the balance chart — A line that curves upward means the portfolio outgrows the withdrawals; one that bends toward the axis shows the year the money runs out. The line turns red when the balance fails to reach your target duration.
- Scan the full rate table — Every rate from 2% to 8% is simulated on your own inputs, so you can see exactly where the sustainable-to-unsustainable boundary falls for your portfolio rather than relying on a rule of thumb.
How the Simulation Works
The withdrawal rate is applied once, to your starting balance, to fix a first-year income. After that the calculator steps forward one year at a time: the balance grows at your nominal return, then that year's withdrawal is removed, having been increased by inflation for every year elapsed.
balance = balance × (1 + return) − initial withdrawal × (1 + inflation)yearThis is the convention the original research used, and it matters. Indexing the withdrawal to inflation means your spending power stays flat rather than the dollar amount staying flat — at 3% inflation, a $40,000 first-year income becomes about $53,800 in year ten and $72,200 in year twenty, simply to buy the same things. That rising claim on a portfolio is what eventually exhausts it, and it is why a rate that looks trivially safe over ten years can fail over forty.
The simulation stops at 60 years and reports "60+ yrs" if the balance is still positive, which is not a promise of perpetuity. Roughly speaking, the portfolio grows indefinitely in this model whenever your return exceeds inflation by more than the withdrawal rate. With the defaults of 7% and 3%, the real return is about 3.9%, which is why 4% sits so close to the boundary and why small changes to either assumption flip the verdict.
| Withdrawal rate | Portfolio multiple of spending | Year-one income on $1,000,000 | Per month |
|---|---|---|---|
| 3.0% | 33.3× | $30,000 | $2,500 |
| 3.25% | 30.8× | $32,500 | $2,708 |
| 3.5% | 28.6× | $35,000 | $2,917 |
| 4.0% | 25.0× | $40,000 | $3,333 |
| 4.5% | 22.2× | $45,000 | $3,750 |
| 5.0% | 20.0× | $50,000 | $4,167 |
| 6.0% | 16.7× | $60,000 | $5,000 |
The multiple is simply the reciprocal of the rate, which is where the familiar "25 times your annual spending" comes from.
Where the 4% Rule Came From, and What It Assumed
The figure originates with William Bengen's 1994 article in the Journal of Financial Planning, which tested inflation-adjusted withdrawals from US stock and bond portfolios against every historical 30-year window in his data and found 4% survived them all. The 1998 Trinity Study by Cooley, Hubbard and Walz extended the approach, publishing success rates across different rates, allocations and time horizons. Both were rigorous and both carried conditions that get dropped when the result is quoted as a rule.
Three of those conditions are worth stating plainly. The horizon was 30 years, which suits a retirement at 65 and not one at 45. The data was US market history, which was unusually favourable compared with most other developed markets over the same century. And the portfolio was a meaningful stock allocation — a conservative, bond-heavy portfolio does not support the same rate, because the growth that refills the balance is not there. Early retirees planning for 40 or 50 years commonly use 3.25% to 3.5% instead, which raises the portfolio needed by roughly 14% to 23%.
Sequence-of-returns risk, which this model cannot show
The most important risk in drawing down a portfolio is not the average return but the order the returns arrive in. Take a $1,000,000 portfolio, $40,000 of withdrawals a year and two years of returns: one at +20% and one at −20%. If the good year comes first, the balance after two years is $888,000. If the bad year comes first, it is $872,000 — $16,000 worse from identical returns in a different order. Without withdrawals both paths end at exactly $960,000; the difference exists only because a falling market forces you to sell more shares to raise the same income, permanently removing units that would have recovered.
Over a full retirement this effect compounds enormously, and it is why two people retiring three years apart with identical portfolios can end up in very different places. This calculator applies one steady return each year and therefore cannot show it. Read the Status card as "sustainable under a smooth average", not as a probability of success. If you want an honest margin, run your plan at a rate half a point below the one you intend to use, and treat that as your real answer.
Two things that come out of the withdrawal, not on top of it
Tax is the first. Money drawn from a traditional 401(k), IRA or similar pre-tax account is taxable income in the year you take it, so a $40,000 withdrawal does not deliver $40,000 of spending. Enter the amount you need to receive grossed up for your expected effective rate if you want the income figure to mean what it says. Investment fees are the second: a 0.5% annual fund charge is subtracted from your return before anything reaches you, so entering 7% when you actually hold funds charging 0.5% overstates the outcome year after year.
The single most effective real-world defence is flexibility. Retirees who reduce spending after a bad year — skipping the inflation increase, or trimming discretionary costs until the portfolio recovers — sustain materially higher rates than a rigid schedule allows, because they stop selling into weakness. A fixed percentage taken mechanically is the least forgiving version of the strategy, and it is the one this calculator models.
These results are informational estimates produced by a smooth average-return model, not financial advice, a forecast, or a probability of success. Before setting a withdrawal rate you intend to live on, discuss it with a licensed financial adviser who can assess your allocation, tax position and time horizon.
Frequently Asked Questions
It is the percentage of your starting portfolio you withdraw in the first year of retirement, then increase with inflation each year afterwards, without the balance running out over your planning horizon. The rate is set once against the opening balance — it is not recalculated annually. At 4%, a $1,000,000 portfolio provides $40,000 in year one and about $41,200 in year two if inflation runs at 3%.
It remains a reasonable starting point and a poor stopping point. The research behind it tested 30-year retirements funded by US stock and bond portfolios with a substantial equity allocation, and its conclusions do not automatically transfer to a 45-year retirement, a bond-heavy portfolio, or a different market's history. Treat 4% as the middle of a range that runs from roughly 3% for long, cautious plans to 5% for short ones, and check where your own inputs put the boundary in the table above.
For a horizon beyond 30 years, many planners drop to 3.25% or 3.5%. The cost is straightforward: at 3.5% you need about 28.6 times annual spending instead of 25, roughly 14% more portfolio, and at 3% you need 33.3 times, about 33% more. Set the duration field to your actual expected horizon and read the rate table rather than assuming a number.
No, and that is its main limitation. It applies one constant return every year, so it cannot show sequence-of-returns risk — the outsized damage done when a poor market arrives early in retirement, forcing you to sell more shares to fund the same income. Two years of +20% and −20% produce $888,000 or $872,000 from the same $1,000,000 depending only on their order. Historical backtests and Monte Carlo simulations exist precisely to capture what this model smooths away.
Nominal. The model grows the balance at the return you enter and separately raises the withdrawal by the inflation rate you enter, so it already handles the adjustment. Entering a real return with inflation still set above zero would deduct inflation twice and make the result far too pessimistic. If you prefer to work purely in real terms, set the inflation field to zero and enter your real return.
Neither. The withdrawal figure is a gross amount taken from the portfolio, so tax on distributions from pre-tax accounts is paid out of it rather than in addition to it. Fund fees are also missing: a 0.5% annual charge should be subtracted from the return you enter. A practical fix is to raise the withdrawal you need by your expected effective tax rate and lower the return by your total fee load.
No. The whole simulation runs in JavaScript in your browser and nothing reaches a server. Your inputs are written into the page URL so a bookmark reopens the same scenario, and a copy is kept in your browser's localStorage so the FIRE calculators can pre-fill. Both clear with your site data, and the amounts are visible in the URL if you share the link.
Because the simulation stops at 60 years, not because the balance is guaranteed forever. That result appears when your return exceeds inflation by more than the withdrawal rate, so the balance grows faster than it is drained. It is a property of the constant-return assumption, and a real portfolio that averages the same return but delivers it unevenly can still fail. Lower the return by a point or two and see whether the verdict holds.
Use Cases
Stress-Testing a 45-Year Retirement
Someone leaving work at 45 sets the duration to 50 years and finds the rate at which the Status card flips from sustainable to failing.
Turning a Balance into a Salary
Converting an $850,000 portfolio into a defensible monthly figure to compare against a current take-home pay before resigning.
Pricing the Cost of Caution
Comparing 4% and 3.25% on the same balance to see exactly how much annual income the extra safety margin gives up.
Testing a Pessimistic Return
Dropping the expected return from 7% to 5% to check whether a plan survives a decade of weaker markets than the last one.
Checking a High-Inflation Assumption
Raising inflation from 3% to 5% to see how much faster an inflation-indexed withdrawal drains the same starting balance.
Sizing an Inherited Portfolio
Working out what income a lump sum can support over a beneficiary's remaining lifetime without depleting the capital early.