Retirement Withdrawal Calculator
Calculates your monthly income from a retirement portfolio at a given withdrawal rate, helping you gauge whether your nest egg will last. Use it when planning how to draw down savings in retirement.
About this calculator
The core formula is straightforward: monthlyIncome = (portfolioValue × withdrawalRate / 100) / 12. This converts an annual withdrawal rate — most famously the 4% rule derived from the Trinity Study — into a monthly dollar amount. The 4% rule was designed to give a portfolio a 95%+ probability of lasting 30 years across historical market scenarios. However, the calculator also takes annual return and inflation rate as inputs to estimate portfolio longevity: each year the portfolio grows by the return rate and shrinks by the withdrawal amount, while that withdrawal amount itself increases with inflation. The real (inflation-adjusted) return r_real ≈ annualReturn − inflationRate determines the sustainable rate. If your real return exceeds your withdrawal rate, the portfolio can theoretically last indefinitely.
How to use
Inputs: portfolio $1,000,000, withdrawal rate 4%, annual return 6%, inflation 2.5%, retirement duration 30 years. Step 1: Annual withdrawal = $1,000,000 × 4% = $40,000. Step 2: Monthly income = $40,000 / 12 = $3,333/month. Step 3: Real return = 6% − 2.5% = 3.5%. Since the real return (3.5%) exceeds the withdrawal rate (4%) only marginally, the portfolio will shrink slowly in real terms but should survive 30 years. At a 5% withdrawal rate, annual draw = $50,000/month = $4,167 — higher but historically riskier over long retirements.
Frequently asked questions
What is the 4% rule and is it still valid for retirement planning?
The 4% rule comes from a 1994 study by financial planner William Bengen, later supported by the Trinity Study, which found that a retiree withdrawing 4% of their initial portfolio annually (adjusted for inflation) had a very high probability of not running out of money over a 30-year retirement. It assumes a portfolio of roughly 50–75% stocks. Critics note that today's lower bond yields and higher valuations may make 3–3.5% safer for new retirees, especially those retiring early. It remains a useful starting benchmark but should be treated as a floor for analysis, not a guaranteed outcome.
How long will my retirement portfolio last at different withdrawal rates?
Portfolio longevity depends on the interaction between your withdrawal rate, investment return, and inflation. At a 3% withdrawal rate with a 6% nominal return and 2.5% inflation, most historical scenarios show the portfolio growing indefinitely. At 4%, it typically lasts 30+ years. At 5–6%, historical failure rates rise significantly, especially in bad sequence-of-returns scenarios where markets drop early in retirement. Using the real return (nominal return minus inflation) as a guide: if your real return exceeds your withdrawal rate, the portfolio is theoretically self-sustaining.
How does inflation affect retirement withdrawals over time?
Inflation erodes the purchasing power of a fixed dollar withdrawal. A monthly withdrawal of $3,000 today buys only about $1,900 worth of goods in 15 years at 3% inflation. To maintain the same standard of living, retirees must increase their withdrawals each year by the inflation rate, which means drawing more dollars from the portfolio over time. The calculator factors in inflation to model this growing withdrawal, which is why portfolios with moderate returns can still be depleted even if initial withdrawals seem small. Keeping a portion of your portfolio in inflation-hedging assets like equities or TIPS is a common mitigation strategy.