How the calculator works
The Retirement Withdrawal Calculator estimates how long a portfolio may last when withdrawals are taken over time.
It models the interaction between:
- starting portfolio value
- withdrawal amount
- withdrawal frequency
- investment return
- inflation
- fees
- time horizon
Main inputs
The calculator may use:
- starting portfolio balance
- annual or monthly withdrawal amount
- withdrawal frequency
- expected annual return
- inflation rate
- withdrawal increase rate
- investment fees
- tax assumptions, if available
- time horizon
Basic withdrawal model
Each period, the calculator applies returns and subtracts withdrawals.
A simplified annual model:
Ending Balance = Starting Balance × (1 + Return Rate) - Withdrawal
For repeated years:
Balance in Year N = Balance in Year N-1 × (1 + Return Rate) - Withdrawal in Year N
The portfolio is depleted when:
Portfolio Balance <= 0
Inflation-adjusted withdrawals
If withdrawals increase with inflation:
Withdrawal in Year N = Initial Withdrawal × (1 + Inflation Rate)^N
Example:
Initial withdrawal = $40,000
Inflation = 2.5%
Year 10 withdrawal = 40,000 × (1.025)^10
Year 10 withdrawal ≈ $51,203
This keeps withdrawals closer to the same purchasing power over time.
Withdrawal rate
The starting withdrawal rate is:
Withdrawal Rate = Annual Withdrawal / Starting Portfolio
Example:
Annual withdrawal = $40,000
Starting portfolio = $1,000,000
Withdrawal Rate = 40,000 / 1,000,000
Withdrawal Rate = 4%
A higher withdrawal rate generally increases depletion risk.
Return conversion
If the calculator uses monthly withdrawals and annual returns, the annual return is converted into a monthly return.
Monthly Return = (1 + Annual Return)^(1 / 12) - 1
This is more accurate than simply dividing the annual return by 12.
Fees
Fees reduce the portfolio return.
Simplified:
Net Return = Gross Return - Annual Fee Rate
When fees are modeled periodically, the fee effect compounds over time because money lost to fees no longer remains invested.
Portfolio depletion year
The depletion year is the first year where the portfolio balance reaches zero or below.
Depletion Year = first year where Portfolio Balance <= 0
If the portfolio does not reach zero within the selected time horizon, the calculator shows the remaining balance.
Example calculation
Example assumptions:
Starting portfolio: $1,000,000
Annual withdrawal: $40,000
Expected annual return: 5%
Inflation: 2.5%
Fees: 0%
Time horizon: 30 years
Year 1:
Portfolio after return = 1,000,000 × 1.05 = 1,050,000
Withdrawal = 40,000
Ending balance = 1,010,000
Year 2 withdrawal with inflation:
Withdrawal = 40,000 × 1.025 = 41,000
The calculator repeats this process year by year.
Sequence-of-returns risk
A simple average return model does not fully capture sequence-of-returns risk.
Sequence-of-returns risk means that poor investment returns early in retirement can have a large negative effect because withdrawals are being taken while the portfolio is down.
This calculator may use a smooth average return assumption. If so, the result should be treated as a planning estimate, not a retirement guarantee.
What this calculator does not account for
This calculator does not fully model:
- market volatility
- sequence-of-returns risk, unless explicitly implemented
- tax law
- pension income
- social security
- healthcare costs
- emergency withdrawals
- changing asset allocation
- spending cuts during downturns
- inheritance goals
- required minimum distributions
- country-specific retirement rules
Best way to use this calculator
Use this calculator to test sustainability.
Run several scenarios:
- lower return
- higher inflation
- higher withdrawals
- lower withdrawals
- longer retirement period
The most useful result is not one precise depletion date. The value is understanding how sensitive the retirement plan is to withdrawals, inflation, and return assumptions.
Changelog
April 2026
Initial public methodology page created.