Your retirement savings need to last a lifetime. This calculator helps you determine sustainable withdrawal rates, estimate how long your money will last, and plan for a secure retirement income stream.
How This Calculator Works
This calculator models your retirement spending:
- Retirement Savings: Total portfolio value at retirement
- Annual Withdrawal: How much you plan to take each year
- Expected Return: Investment growth rate during retirement
- Inflation Rate: Expected price increases over time
- Years of Retirement: How long your savings need to last
- Success Probability: Likelihood your money lasts
The Formula Explained
Sustainable Withdrawal = Portfolio × Safe Withdrawal Rate
The classic 4% Rule: Withdraw 4% the first year, then adjust for inflation annually. Historically, this has 95%+ success rate over 30-year periods.
Years Money Lasts = f(Portfolio, Withdrawal, Return, Inflation)
This requires simulation since returns vary year to year.
Step-by-Step Example
$1,000,000 Retirement Portfolio
| Withdrawal Rate | Annual Income | 30-Year Success Rate* |
| 3% | $30,000 | ~99% |
| 4% | $40,000 | ~95% |
| 5% | $50,000 | ~80% |
| 6% | $60,000 | ~60% |
*Based on historical US market returns. Your results may vary.
At 4% withdrawal, your $1M provides $40,000/year with high confidence for 30 years.
Frequently Asked Questions
What is the 4% rule?
The 4% rule states you can withdraw 4% of your portfolio in year one, then increase by inflation annually, with high probability your money lasts 30 years. It's based on research by Bill Bengen (1994) using historical US market data. The "4%" became the standard safe withdrawal rate guideline.
Is the 4% rule still valid?
The 4% rule remains a reasonable starting point but has limitations. Critics note: (1) It's based on US historical returns—other countries fared worse, (2) Today's lower interest rates may reduce safe rates, (3) It assumes a fixed 30-year period. Some advisors now recommend 3-3.5% for added safety.
What is sequence of returns risk?
Sequence risk is the danger of bad returns early in retirement. If markets crash right after you retire, you're selling shares at low prices, depleting your portfolio faster. The same total return in different sequences produces dramatically different outcomes. This is why retirees should hold bonds/cash for near-term spending.
How much do I need to retire?
A common guideline: 25 times your annual expenses (inverse of 4% rule). If you need $60,000/year, save $1.5M. If Social Security covers $24,000, you only need to fund $36,000, requiring $900K. Actual needs depend on expenses, other income, and risk tolerance.
Should I adjust withdrawals based on market conditions?
Many retirees use flexible withdrawal strategies: (1) Reduce withdrawals in down years, (2) Increase when markets perform well, (3) Use guardrails (+20%/-10% from target). Flexibility significantly improves portfolio survival but requires lifestyle adjustability.
What's the best asset allocation in retirement?
Research suggests 50-70% stocks (for growth to combat inflation) and 30-50% bonds/cash (for stability and near-term spending). This is more conservative than accumulation years. Maintain 2-3 years of expenses in safe assets so you never sell stocks in a down market.
How does Social Security affect my withdrawal rate?
Social Security is like owning a bond paying guaranteed inflation-adjusted income. More SS income means you can take less from your portfolio or tolerate higher withdrawal rates. For many retirees, SS covers 30-50% of expenses, significantly reducing portfolio burden.
What about required minimum distributions (RMDs)?
At age 73 (currently), you must start withdrawing from traditional IRAs/401ks. RMD percentages are based on life expectancy tables (starting at ~3.8%, increasing with age). RMDs may exceed your desired withdrawal rate—plan for taxes and reinvest excess if not needed.
Key Points to Remember
- 4% is a guideline, not a guarantee: Adjust for your situation
- Sequence risk matters: Early retirement returns have outsized impact
- Flexibility helps: Adjusting spending in bad years extends portfolio life
- Don't forget inflation: Your expenses will roughly double over 25 years
- Social Security supplements: Reduces pressure on your portfolio