How the Retirement Withdrawal Calculator works
This tool answers a core drawdown question: starting from a retirement balance, if you withdraw a fixed dollar amount each year — increasing it every year to keep pace with inflation — how many years will the money last? It uses the standard closed-form portfolio-depletion formula built on an inflation-adjusted (real) rate of return, the same underlying math used to size sustainable withdrawal rates such as the well-known 4% rule.
The formula
First, the calculator converts your nominal return and inflation assumptions into one real growth rate using the Fisher relationship:
r = (1 + return) / (1 + inflation) − 1
Then, for a starting balance P, a first-year withdrawal W (which grows with inflation every year after), and the real rate r, the number of years until the balance reaches zero is:
years = −ln(1 − r·P / W) / ln(1 + r)
If your real rate is essentially zero (return and inflation roughly cancel out), the formula simplifies to years = P / W — the balance divided by a constant withdrawal. If the withdrawal rate (W ÷ P) is at or below the real rate r, the argument of the logarithm is zero or negative, meaning the balance grows in real terms at least as fast as you draw it down — under these constant assumptions, it never mathematically depletes.
Worked example
Take a $750,000 balance with a $30,000 first-year withdrawal (a 4% initial withdrawal rate), a 5% expected annual return, and 3% inflation. The real rate is (1.05 / 1.03) − 1 ≈ 1.94%. Plugging into the formula gives roughly 34–35 years before the balance is exhausted, with total withdrawals over that period — summed in nominal, not-yet-inflation-adjusted dollars — well above the starting balance because of the growing withdrawal schedule and ongoing investment returns.
What moves the result most
- Withdrawal rate: the ratio of your first-year withdrawal to your starting balance is the single biggest lever. A small change here — say from 4% to 5% — can cut a decade or more off portfolio longevity.
- The gap between return and inflation: what matters is not the return alone but the real, inflation-adjusted return. A 7% return with 5% inflation behaves very differently from a 7% return with 2% inflation.
- Sequence, not just average: this model assumes the same return every single year. Real portfolios experience volatility, and a downturn in the first few retirement years can deplete savings faster than an average-return model suggests (sequence-of-returns risk).
How this relates to the 4% rule
The "4% rule" is a widely cited retirement-planning guideline: withdraw about 4% of your starting balance in year one, then increase that dollar amount for inflation every year after, and a balanced stock-and-bond portfolio has historically had a good chance of lasting roughly 30 years. This calculator applies the identical growing-withdrawal logic but lets you substitute your own return and inflation assumptions instead of relying on a fixed historical rule of thumb — useful for stress-testing what happens at withdrawal rates above or below 4%, or under more conservative return expectations.
Frequently Asked Questions
How is the number of years my savings will last calculated?
What if my withdrawal rate is below my real rate of return?
How does this compare to the 4% rule?
Does this model account for market volatility or sequence-of-returns risk?
General Household Budget Ratios (50/30/20 Rule)
| Category | % of Net Income | Examples |
|---|---|---|
| Needs | 50% | Rent, groceries, utilities, insurance |
| Wants | 30% | Dining out, entertainment, hobbies |
| Savings / Debt | 20% | Emergency fund, retirement, extra payments |