How to use the withdrawal calculator
The calculator opens with an example: $500,000, withdrawals of $3,000 a month that rise 2.5% a year, and a 5% annual return. Replace any value with your own.
- Starting balance. The amount you will draw from: savings, an investment account or a retirement pot. Use the balance after any taxes you would owe on withdrawing it.
- Monthly withdrawal. What you plan to take out each month in the first year. If you think in yearly amounts, divide by 12.
- Annual return. The average yearly growth you expect after fees. The money that has not been withdrawn yet keeps earning this rate.
- Annual increase in withdrawals. Usually your inflation assumption, so the withdrawal keeps its buying power. Enter 0 to keep it level.
- Target number of years. How long the money needs to last. The calculator solves for the withdrawal that empties the account in exactly that time.
The chart shows the balance at the end of every year for up to 60 years, with a dashed line for the withdrawal that lasts your target. The table gives the withdrawals, the growth and the balance year by year.
How the calculation works
The calculator steps through the months. Each withdrawal comes out at the start of the month, and what remains grows at the monthly equivalent of the annual return:
W in year y = W1 × (1 + g)y − 1W1 is the first-year monthly withdrawal, r the annual return and g the annual increase in withdrawals. The money lasts until the balance is too small for a full withdrawal.
The withdrawal that lasts exactly N years sets the present value of all withdrawals equal to the starting balance:
q = (1 + g) ÷ (1 + r), a = Σm=0..11 (1 + i)−mB is the starting balance, i the monthly return and a the value at the start of a year of twelve $1 withdrawals. When g equals r, the bracket becomes a × N.
The money lasts indefinitely when the return beats the increase and the first withdrawal is at most B × (1 − q) ÷ a.
A worked example
You start with $500,000 and withdraw $3,000 a month, a first-year withdrawal rate of 7.2%. Each year the withdrawal rises 2.5%, and the remaining balance earns 5%.
The money lasts 17 years 1 month. Over that time you withdraw $757,951 in total, of which $257,951 came from investment growth rather than the original balance. By the final year the monthly withdrawal has grown to $4,565.
To make the same balance last 30 years, the first withdrawal would need to be $1,971 a month. To make it last indefinitely, it would need to stay at or below $1,014.
What changes the answer most
The withdrawal amount and the return work against each other. Small changes in either move the end date by years:
| Scenario | Money lasts | Total withdrawn |
|---|---|---|
| $2,500 a month | 21 years 7 months | $845,506 |
| $3,000 a month (example) | 17 years 1 month | $757,951 |
| $3,500 a month | 14 years 2 months | $705,705 |
| Example at a 3% return | 14 years 6 months | $622,329 |
| Example at a 7% return | 21 years 5 months | $1,006,576 |
| Example with no yearly increase | 23 years 1 month | $832,176 |
Two things stand out. First, the effect is not symmetrical: cutting the withdrawal buys more extra years than raising it costs, because a smaller draw leaves more money compounding. Second, the inflation increase matters as much as the return. Dropping it makes the money last longer on paper, but by year 20 a level $3,000 buys noticeably less than it does today.
Choosing a target and a withdrawal
If you know how long the money needs to last, the target-years result answers the more useful question. For the example balance and assumptions:
| Money needs to last | First-year monthly withdrawal |
|---|---|
| 20 years | $2,653 |
| 30 years | $1,971 |
| 40 years | $1,640 |
| Indefinitely | $1,014 |
Stretching the horizon from 30 to 40 years costs less a month than stretching it from 20 to 30. Each extra decade is cheaper than the last, because the later withdrawals are paid largely from growth. Making the money last indefinitely means living on what the balance can earn above the yearly increase, which is a big step down from any fixed horizon.
Steady returns versus real markets
This calculator assumes the same return every year. Invested money does not behave that way: a portfolio averaging 5% might gain 18% one year and lose 12% the next. When you are withdrawing, the order matters. Losses early on force you to sell more units at low prices, and those units are not there to recover later. Two portfolios with the same average return can last very different lengths of time. This is called sequence-of-returns risk.
For money invested in stocks, treat the result here as the central case and check how a bad first decade would change it with the retirement withdrawal calculator or the retirement Monte Carlo calculator. For cash in savings accounts or CDs, a steady return is a fair approximation, though the rate itself can change.
What this calculator does not include
- Taxes. Withdrawals from pre-tax retirement accounts are taxable income in the US, and growth in taxable accounts is taxed along the way. Enter after-tax figures or allow for tax in the withdrawal.
- Other income. Social Security, a pension or part-time work reduce what you need to withdraw. Subtract them from your spending before entering the withdrawal.
- Required minimum distributions and early-withdrawal penalties on retirement accounts.
- Irregular spending. Large one-off costs such as a new car or home repairs shorten the timeline; a buffer in cash helps.
- Fees, unless you have already deducted them from the return you entered.