How this calculator works
The projection applies an annual return, subtracts the year's withdrawal, and increases the following withdrawal with inflation. It repeats that process through the selected horizon and reports the ending balance or modeled depletion year.
Why withdrawal order matters
Actual portfolios experience uneven returns. Poor markets early in retirement can be more damaging than the same average return arriving in a different order, because withdrawals remove assets before a recovery. A constant-return model cannot represent that sequence risk.
Real-world example
A $1 million portfolio with a $40,000 first-year withdrawal begins at a 4% rate. At 2% inflation, the withdrawal rises each year, so total distributions over 30 years substantially exceed $1.2 million.
Common mistakes
- Treating the modeled maximum as a safe recommendation.
- Ignoring taxes, investment fees, and healthcare costs.
- Assuming a fixed average return eliminates sequence risk.
- Forgetting Social Security, pensions, or other income.
When to use this calculator
Use it to stress-test spending against different returns, inflation rates, and horizons. Pair deterministic results with flexible spending rules and professional advice for high-stakes retirement decisions.
FAQ
What is a safe withdrawal rate?
There is no universally safe rate. Outcomes depend on horizon, allocation, market sequence, fees, taxes, spending flexibility, and other income.
Why does the withdrawal increase?
The model increases spending with inflation to represent maintaining purchasing power.
Does this model sequence risk?
No. It uses the same return each year, so it cannot show the effect of poor early market returns.