How the Savings Withdrawal Calculator works
This tool answers the drawdown-phase question: if you withdraw a fixed amount from an interest-bearing balance every month, quarter, or year, how long will the money last before it runs out? It is the mirror image of the standard annuity-payment formula — instead of solving for the payment that drains a balance over a chosen term, it solves for the term a chosen payment takes to drain the balance.
The formula
For a starting balance P, a periodic interest rate i (the annual rate divided by withdrawals per year), and a fixed periodic withdrawal W, the number of withdrawal periods until the balance reaches zero is:
n = ln(W / (W − P × i)) / ln(1 + i)
This only produces a finite answer when the withdrawal exceeds the interest earned each period (W > P × i); otherwise the balance never depletes. If the interest rate is 0%, the formula reduces to n = P / W — the balance divided evenly by the withdrawal amount. The calculator assumes withdrawals are taken at the end of each period (an ordinary annuity) and that interest compounds at the withdrawal frequency.
Worked example
Take a $200,000 balance earning 4% annual interest, with $1,500 withdrawn every month. The periodic rate is 0.04 / 12 ≈ 0.003333, and each month's interest on the full balance would be about $667 — less than the $1,500 withdrawal, so the balance draws down. Plugging into the formula gives roughly 177 months, or about 14 years and 9 months, before the balance reaches zero. Total withdrawals over that time come to about $265,000, of which roughly $65,000 is interest earned along the way and the rest is the original principal.
What moves the payout period most
- Withdrawal amount: a smaller withdrawal relative to the balance stretches the payout period disproportionately, because more of the balance stays invested and keeps earning interest.
- Interest rate: a higher rate slows the drawdown — at 0% the $200,000 example lasts only 133.3 months ($200,000 / $1,500); at 4% it stretches to roughly 177 months because interest replaces part of each withdrawal.
- Frequency: withdrawing the same annual total monthly instead of annually draws the balance down slightly faster in calendar time, because interest has less time to compound between withdrawals.
When the balance never runs out
If the periodic withdrawal is less than or equal to the interest the balance earns in that period, the balance does not shrink — it holds steady (withdrawal equal to interest) or keeps growing (withdrawal smaller than interest). In that case there is no finite "time until zero" to compute, and the calculator reports that the balance sustains indefinitely under the entered assumptions. Note that this calculation does not account for taxes, account fees, or inflation — for long payout horizons, consider re-running the numbers with a real (inflation-adjusted) interest rate.