Retirement Withdrawal Calculator
Estimate how much you can safely withdraw from your retirement portfolio each year, adjusted for inflation. Use this when planning annual spending in retirement under the 4% rule or a custom rate.
About this calculator
This calculator computes your inflation-adjusted annual withdrawal from a retirement portfolio. The formula is: withdrawal = portfolioValue × (withdrawalRate / 100) / (1 + inflationRate / 100)^yearsInRetirement. The numerator gives your nominal annual withdrawal based on your chosen rate (e.g., the classic 4% rule). Dividing by the inflation factor discounts that amount back to today's purchasing power, showing you what the withdrawal is worth in real terms after 'yearsInRetirement' years of inflation erosion. The 4% rule originates from the Trinity Study, which found a 4% initial withdrawal rate historically sustained a 30-year retirement across most market conditions. Choosing a lower rate (e.g., 3%) increases longevity of funds, while a higher rate carries more depletion risk. Inflation adjustment is critical because $40,000 today buys significantly less 20 years from now at even a modest 3% annual inflation.
How to use
Suppose you have a $1,000,000 portfolio, plan to withdraw at 4%, expect 3% annual inflation, and are 10 years into retirement. Step 1 — Nominal annual withdrawal: $1,000,000 × (4 / 100) = $40,000. Step 2 — Inflation discount factor: (1 + 0.03)^10 = 1.3439. Step 3 — Inflation-adjusted withdrawal: $40,000 / 1.3439 ≈ $29,764. This means your $40,000 withdrawal has the purchasing power of roughly $29,764 in today's dollars after 10 years of 3% inflation.
Frequently asked questions
What is the 4% rule and is it still a safe retirement withdrawal rate?
The 4% rule states that withdrawing 4% of your portfolio in year one, then adjusting for inflation annually, historically sustained a 30-year retirement. It was derived from the 1994 Trinity Study using U.S. stock and bond data. Many modern planners suggest a slightly lower rate of 3–3.5% given lower expected future returns and longer life expectancies. It remains a useful starting benchmark but should be revisited alongside your actual asset allocation and spending needs.
How does inflation affect my retirement withdrawal strategy over time?
Inflation erodes the purchasing power of each dollar you withdraw, meaning a fixed nominal withdrawal buys progressively less each year. At 3% annual inflation, $40,000 today is worth only about $22,000 in real terms after 20 years. Most withdrawal strategies include an annual cost-of-living adjustment (COLA) to maintain lifestyle. Failing to account for inflation is one of the most common and damaging retirement planning mistakes.
When should I use a withdrawal rate lower than 4% in retirement?
A rate below 4% is advisable if you retire early (before age 60), have a long life expectancy, hold a conservative portfolio, or face unusually high expected inflation. For a 40-year retirement horizon, researchers suggest 3–3.5% is safer. If your portfolio is heavily weighted toward bonds or cash, expected returns may not keep pace with a 4% draw. A financial planner can help you stress-test your specific situation using Monte Carlo simulations.