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.