The core retirement-withdrawal question is deceptively simple: given a portfolio, an annual drawdown, and a horizon, does the money die before you do? This calculator answers it deterministically — year by year, with the withdrawal growing by inflation — and wraps the base plan in a ±2% return band so you can see how fragile or robust your number is. The depletion year, not the ending balance, is the number to watch.
It is built around the 4% rule convention: withdraw a fixed percentage of the starting portfolio in year one, then grow that dollar amount with inflation forever. Whether 4% is right for you depends on your horizon and returns, which is exactly what the scenario band tests.
How the drawdown simulation works
Each year the portfolio earns the return you set, then pays out that year's withdrawal, which equals the first-year amount compounded by inflation. If the balance hits zero, the run records the depletion year and stops going negative. The scenario band reruns the identical plan at returns 2 points below and above your base — same withdrawals, same inflation, only the market's generosity changes.
The 4% rule is a heuristic with historical backing; a deterministic model like this one solves the annuity version of the same problem exactly. Run the numbers and you will find the flat-return, inflation-indexed answer lands near — not at — 4%, because the original rule embeds sequence-of-returns risk that a constant-return model never sees. The sustainable-rate figure in the worked example is the annuity solution from the same engine.
withdrawal[n] = firstYear × (1 + inflation)^(n−1)
balance[n] = balance[n−1] × (1 + return) − withdrawal[n]
scenarios = same plan at return −2%, base, +2%
sustainable = solveWithdrawalRate(portfolio, years, return, inflation)What this model does not do is as important as what it does: it assumes a constant return every year, so it cannot model sequence-of-returns risk — the real-world pattern where bad early years permanently damage a portfolio even if the long-run average looks fine. Treat the depletion year as a planning anchor, then keep flexibility (spending cuts, part-time income) as your buffer against the sequence risk this calculator deliberately leaves out.
The sample, end to end. A $1,000,000 portfolio, $40,000 withdrawn in year one (4%), inflated 2.5% annually for 30 years at 7% returns. Base case: ends with $2,710,311. The band around it: at 5% returns, ends with $762,943; at 9%, ends with $6,393,764. Solve the same problem as a pure annuity and the sustainable first-year rate is 6.22% — $62,158 a year — versus the 4% rule's $40,000. The gap between those two numbers is the price of surviving bad early markets, which this deterministic model prices as zero.
Terms & definitions
Drawdown
Withdrawing from a portfolio in retirement, converting savings into income year by year.
Depletion year
The year a withdrawal plan runs the balance to zero — the failure point of a retirement drawdown.
4% rule
Withdraw 4% of the starting portfolio in year one, then grow the dollar amount with inflation annually.
Sequence-of-returns risk
The danger that poor returns early in retirement permanently impair a portfolio, even if the long-run average is healthy.
Frequently asked questions
What is the 4% rule?
A retirement withdrawal heuristic: in year one withdraw 4% of your portfolio, then adjust the dollar amount for inflation each subsequent year. It comes from historical US market backtests over 30-year windows. It is a rule of thumb, not a guarantee — this calculator lets you stress-test the same convention at returns and horizons the original study did not use.
What is a safe withdrawal rate?
The largest first-year withdrawal (inflation-indexed after) that a portfolio can sustain for a chosen horizon without depleting. In a constant-return model it is the annuity solution — the engine solves it exactly, and the worked example shows it landing well above 4% at 7% returns over 30 years. Historical safe-rate studies land near 4% because they price in sequence-of-returns risk that a deterministic calculator omits.
How does this retirement withdrawal calculator handle market ups and downs?
It does not model individual market years — returns are a single constant you choose, tested at ±2% as a scenario band. Sequence-of-returns risk (bad decades early in retirement) can make real outcomes worse than the base case even when the long-run average matches. Use the conservative band as your stress anchor, not as a worst case.
Should my withdrawal rate change over retirement?
Often yes. Flexible strategies — guardrails that cut spending after bad years, or higher spending early when health is good — historically support higher lifetime withdrawals than a flat inflation-indexed rule. This calculator models the flat rule; if your plan includes adjustments, test each phase separately.
References
- Investor.gov — compound interest calculator and retirement planning fundamentals: investor.gov
- IRS — Retirement topics: required minimum distributions: irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions
- SSA — retirement benefits and claiming-age effects: ssa.gov/benefits/retirement/