Retirement Withdrawal Calculator: How Long Will Your Savings Last?
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To see how much you can withdraw, spread your savings over the years you need: first-year withdrawal W = B ÷ Σ((1 + inflation) ÷ (1 + return))ᵗ. With $800,000, a 5% return, 2.5% yearly raises and 30 years, W is about $37,009. Withdrawing $40,000 instead makes the money last about 26 years and 10 months.
Withdrawing $40,000 in the first year (5.00% of $800,000) and raising it 2.5% a year, your money lasts about 26 years 10 months at 5.0% growth.
Year-by-year
| Year | Start balance | Withdrawal | Growth | End balance |
|---|---|---|---|---|
| 1 | $800,000 | $40,000 | $38,000 | $798,000 |
| 2 | $798,000 | $41,000 | $37,850 | $794,850 |
| 3 | $794,850 | $42,025 | $37,641 | $790,466 |
| 4 | $790,466 | $43,076 | $37,370 | $784,760 |
| 5 | $784,760 | $44,153 | $37,030 | $777,638 |
| 6 | $777,638 | $45,256 | $36,619 | $769,001 |
| 7 | $769,001 | $46,388 | $36,131 | $758,744 |
| 8 | $758,744 | $47,547 | $35,560 | $746,756 |
| 9 | $746,756 | $48,736 | $34,901 | $732,921 |
| 10 | $732,921 | $49,955 | $34,148 | $717,115 |
| 11 | $717,115 | $51,203 | $33,296 | $699,207 |
| 12 | $699,207 | $52,483 | $32,336 | $679,060 |
Each withdrawal is taken at the start of the year. The rest of the balance earns the yearly return.
Show the steps
- Year 1: withdraw $40,000.00 from $800,000.00, leaving $760,000.00. That earns 5.00%, so the balance becomes $798,000.00.
- Each following year the withdrawal rises by 2.50%: year 2 is $41,000.00, year 3 is $42,025.00.
- Repeat until the balance cannot cover the next withdrawal. That happens in year 27.
Withdrawal that uses up the money in N years
W = B ÷ Σ q^t, q = (1 + inflation) ÷ (1 + return), t = 0 … N − 1
B = savings, W = first-year withdrawal
- Assumes a steady return every year. Real returns vary, and a bad market early in retirement does more damage than the same average later.
- Withdrawals are before tax. Money from traditional accounts is taxed as income when you take it out.
Estimates for planning and learning, not financial, tax, legal or medical advice. Check figures with your lender, tax preparer or doctor before you act.
About this calculator
The hardest part of retirement planning is turning a pile of savings into a paycheck that lasts. Take out too much early and the money runs out. Take out too little and you live on less than you could. This calculator answers either question: how long will my savings last at the amount I want to spend, or how much can I spend if I want the money to last a set number of years.
It models what happens in real life. You withdraw an amount in the first year and raise it each year to keep up with inflation. The money you leave invested earns a return. The calculator follows that year by year until the balance hits zero or the time is up, and shows you the balance and the withdrawals on a chart and in a table.
The results are only as good as the return and inflation you assume. In practice returns are uneven, and a bad market in the first few years of retirement can hurt more than the same average return spread evenly. Use the numbers to size up your plan, then test a more cautious return to see how much room you have.
How to use it
- Choose a question: how long the money lasts, or how much you can withdraw.
- Enter the savings you will have when you retire.
- For “how long”, enter your first-year withdrawal. For “how much”, enter the number of years the money must last.
- Set the expected yearly return and the yearly raise for inflation.
- Read the result, the charts and the year-by-year table. Try a lower return to stress-test the plan.
The 4% guideline
A well-known rule of thumb says you can withdraw about 4% of your savings in the first year, then raise that amount with inflation each year, and the money should last about 30 years. It comes from historical U.S. stock and bond returns. It is a starting point, not a guarantee. A longer retirement, lower expected returns or a bad market early on can call for a lower rate. The calculator shows your starting withdrawal rate so you can compare it with 4%.
Worked example
You retire with $800,000 and want to spend $40,000 in the first year, which is 5% of savings. Withdrawals rise 2.5% a year and the money earns 5%. Year 1 leaves $760,000, which grows to $798,000. Year 2 takes $41,000, and so on. The balance runs out in the 27th year, so the money lasts about 26 years and 10 months. If you want the money to last 30 years instead, the first-year withdrawal drops to about $37,009.
What can make your savings run out sooner
- A bad market in the first years, known as sequence of returns risk.
- Higher inflation than you assumed.
- Large one-time costs such as health care or a home repair.
- Taxes. Withdrawals from traditional accounts are taxed as income, so you keep less than you take out.
Ways to make your money last longer
Many retirees spend a little less after a bad market year, delay Social Security to get a larger check, keep a cash buffer for the first few years, or work part time early on. Even small changes can add years. Try them in the calculator by lowering the first-year withdrawal or the return.
Sources
Quick check: test yourself
Using the 4% guideline, what is the first-year withdrawal from $500,000?
Correct answer: $20,000. $500,000 × 0.04 = $20,000. You then raise it each year for inflation.
Which makes your savings last longer, other things equal?
Correct answer: A lower starting withdrawal. Smaller withdrawals leave more money invested to grow.
You start retirement with $500,000 and withdraw $25,000 in year one. What is your starting withdrawal rate?
Correct answer: 5%. 25,000 ÷ 500,000 = 0.05, or 5%.
Pick an answer for each question.
Common questions
How long will $1 million last in retirement?
It depends on how much you spend. At a 4% starting withdrawal ($40,000) with 5% growth and 2.5% yearly raises, $1 million lasts well beyond 30 years. At $80,000 a year it may last only about 15 years. Enter your own numbers above.
What is a safe withdrawal rate?
Many planners start at about 4% of savings in the first year, raised for inflation each year. Longer retirements or lower expected returns can call for 3% to 3.5%.
Does this include Social Security or a pension?
No. Subtract your guaranteed income from your spending first and enter only the amount you need to take from savings.
Are the withdrawals before or after tax?
Before tax. If your savings are in a traditional IRA or 401(k), the withdrawals are taxed as income, so your spending money is lower than the amount shown.
Why does the money last longer with a higher return?
Because the balance you leave invested earns more each year, which offsets the withdrawals. A one-point change in return can add several years.
What return should I assume?
A portfolio of mostly stocks has historically returned more than one that is mostly bonds, but with more ups and downs. Many planners use 4% to 6% for a balanced mix. Test a lower number to see how sensitive the result is.
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