Retirement Withdrawal Calculator – Sustainable Withdrawals, Portfolio Longevity and Income Gaps
The Retirement Withdrawal Calculator is designed to answer the key questions most retirees and pre-retirees have: How much can I safely withdraw each year? How long will my portfolio last? How much do I need saved before retiring? And will my savings plus guaranteed income actually cover the lifestyle I want?
Instead of relying on rough rules of thumb alone, this calculator lets you plug in your own numbers for portfolio size, retirement length, expected investment return and inflation. It then estimates sustainable withdrawals, simulates portfolio longevity, calculates required savings and highlights any income gap between your targets and what your money can realistically support.
How the Retirement Withdrawal Calculator Works
The calculator is divided into four connected modes:
- Portfolio Longevity: Simulates how long your portfolio might last at a chosen withdrawal amount.
- Sustainable Withdrawal: Estimates a stable yearly withdrawal in today’s money that can be sustained for a target number of years.
- Required Savings: Works backwards from your desired annual withdrawal to estimate the nest egg needed.
- Retirement Income Gap: Compares your desired income with guaranteed income and portfolio withdrawals to show any shortfall.
Each mode relies on simple, transparent formulas and assumptions, making it easier to understand the trade-offs involved in retirement planning.
Mode 1: Portfolio Longevity Simulation
The Portfolio Longevity mode answers the question: “If I start with this much money and withdraw this much each year, how long might my savings last?” You specify a starting balance, an initial annual withdrawal, an expected rate of return, an inflation rate and a number of years to simulate.
Simulation Logic
The calculator runs a year-by-year projection. At the start of each year, the portfolio grows at the expected investment return. Then a withdrawal is taken, increased with inflation each year to keep your spending constant in real terms.
If the balance ever falls to zero or below, the simulation records the year of depletion. If the portfolio still has money at the end of the simulation period, the calculator reports that it was not depleted within that horizon.
Mode 2: Sustainable Withdrawal (Today’s Money)
The Sustainable Withdrawal mode estimates how much you can withdraw each year, in today’s purchasing power, so that your portfolio should last for a given number of years under constant real return assumptions.
Real Return and Real Withdrawals
Investment returns and inflation interact to create a “real” return, which represents growth after inflation:
If you withdraw a constant amount in real terms each year, the problem becomes similar to drawing an annuity from your portfolio at a fixed real return. The sustainable withdrawal in today’s money can be approximated as:
where r is the real return and n is the number of years. If real return is very close to zero, the calculator simplifies to dividing the portfolio evenly over the years.
The tool reports:
- Annual withdrawal in today’s money.
- Implied withdrawal rate relative to your portfolio.
- Total real withdrawals over the period.
- Approximate total nominal withdrawals assuming inflation.
Mode 3: Required Savings (Nest Egg)
The Required Savings mode works backward. Instead of starting from a portfolio size, you start from a desired annual withdrawal in today’s money and a retirement length. For given assumptions about return and inflation, the calculator estimates how much you need saved at the start of retirement.
Required Portfolio Formula
Using the same real return approach, the required portfolio is the present value of a stream of real withdrawals:
If real return r is close to zero, the estimate reduces to Withdrawal × Years. The tool also reports the implied withdrawal rate and the total real withdrawals over the period.
Mode 4: Retirement Income Gap Analysis
The Retirement Income Gap mode combines your desired income, guaranteed income and portfolio characteristics to show whether you may be on track or facing a shortfall.
The steps are:
- Compute required withdrawals from the portfolio: Desired Income − Guaranteed Income.
- Use the sustainable withdrawal method to estimate what your portfolio can reasonably provide.
- Compare the sustainable withdrawal with the required withdrawal to calculate the income gap.
If the sustainable withdrawal is higher than or equal to required withdrawal, the status is labeled as “On track” in this simplified framework. If it is lower, the difference is shown as an annual shortfall.
Understanding the Limits of Retirement Withdrawal Estimates
All retirement calculators rely on simplified assumptions. Real-world returns are volatile, inflation varies year to year, and actual spending patterns often change over time. The estimates in this tool do not account for:
- Market volatility and sequence-of-returns risk.
- Taxes, investment fees and one-time expenses.
- Changes in lifestyle, health costs or unexpected events.
- Adjustments you might make in response to market conditions.
However, even with these limitations, modeling different withdrawal rates, return assumptions and retirement lengths provides valuable insight into how sensitive your plan is to each variable.
Examples of Retirement Withdrawal Calculations
Example 1: Can My Savings Last 30 Years?
Suppose you retire with 500,000 in savings, plan to withdraw 25,000 per year, expect a 5% return and 2% inflation, and want to see what happens over 30 years. The Portfolio Longevity mode simulates this path year by year, adjusting withdrawals for inflation and applying returns annually. It then tells you whether your savings are projected to last the full 30 years and what the remaining balance might be.
Example 2: What Is a Sustainable Withdrawal Rate?
Imagine you have 800,000 at retirement, expect 6% annual return and 2.5% inflation, and want withdrawals to last 30 years. In the Sustainable Withdrawal mode, the calculator computes a real withdrawal that keeps your spending level in today’s money while aiming to end near zero after 30 years. It might report, for example, an annual withdrawal of around 38,000 in today’s money, corresponding to a withdrawal rate just under 5%.
Example 3: How Much Do I Need Saved?
If you want 40,000 per year in today’s money for 30 years, expect a 5% return and 2% inflation, the Required Savings mode estimates the nest egg needed at retirement. You can then compare this target with your current savings and time horizon to evaluate whether your current savings rate is on track.
Example 4: Do I Have an Income Gap?
Say you want 60,000 per year in retirement, expect 25,000 from pensions and Social Security, and have 700,000 invested with 6% return and 2.5% inflation assumptions over 30 years. The Income Gap mode calculates that you need 35,000 per year from your portfolio and compares this with an estimated sustainable withdrawal from 700,000. The difference shows whether you have an annual shortfall or margin of safety.
How to Use This Tool Effectively
- Experiment with different return and inflation assumptions to see how sensitive your plan is to changes.
- Try more conservative scenarios alongside optimistic ones.
- Adjust retirement length to reflect different retirement ages or longevity expectations.
- Use the Required Savings mode for goal setting, and the Income Gap mode to evaluate if your current plan supports your desired lifestyle.
- Review your results regularly and update them as your savings, income expectations and market conditions change.
Related Tools from MyTimeCalculator
For broader financial planning, these tools may also help:
- Net Worth Calculator
- Retirement Calculator
- Inflation-Adjusted Salary Calculator
- Compound Interest Calculator
Retirement Withdrawal Calculator FAQs
Frequently Asked Questions About Retirement Withdrawals
Understand how withdrawals, returns, inflation and retirement length affect your plan.
There is no universal safe rate. Some people reference rules of thumb such as 3% to 4% per year, but the right number depends on your time horizon, asset allocation, flexibility in spending and tolerance for risk. The sustainable withdrawal mode helps you explore different rates under your assumptions.
No. The calculations are before tax and before fees. You may choose more conservative return assumptions to roughly account for taxes and investment costs, or run separate tax and fee estimates alongside this tool.
Expressing everything in today’s money makes it easier to understand what your withdrawals can actually buy over time. Using a real return (after inflation) with real withdrawals creates a cleaner model for long-term planning, although real markets will still vary year to year.
If returns are higher than assumed, your savings may last longer or support higher withdrawals. If returns are lower, you may need to withdraw less, retire later or adjust your lifestyle. Periodically revisiting your plan with updated numbers is important.
No. It is a starting point to understand the math behind withdrawal rates and savings targets. A complete retirement plan should also consider taxes, healthcare, insurance, estate planning and your personal circumstances, ideally with professional advice.
Yes. You can input your current portfolio balance and remaining expected retirement years. The calculator can help you test different withdrawal amounts and see how they might affect portfolio longevity and your long-term plan.