How the calculation works
Each month, Calcist takes out your withdrawal, then lets the rest grow at your yearly return (converted to a monthly rate). Once a year it raises your withdrawal by the inflation rate you choose, so you keep the same buying power. It stops when the money runs out, or after 100 years if your returns keep up with what you take out.
For example, $500,000 with $2,500 a month taken out:
- Earning 5% a year, raising withdrawals 3% a year for inflation: lasts about 20 years and 5 months.
- Earning 5%, with withdrawals kept flat: about 34 years and 3 months.
- Kept in cash earning nothing: exactly 16 years and 8 months (500,000 ÷ 2,500 = 200 months).
Inflation makes a big difference over a long retirement, so it's worth leaving that box filled in.
The 4% rule
A common rule of thumb says you can take out about 4% of your savings in the first year of retirement, then raise that amount with inflation, and have a good chance of lasting 30 years. On $500,000 that's $20,000 a year, about $1,667 a month. It came from studies of past US stock and bond returns, so treat it as a starting point rather than a promise.
Things this calculator can't know
- Returns aren't steady. Real investments go up and down. A bad market early in retirement hurts more than the same drop later, which is called sequence-of-returns risk.
- Taxes. Withdrawals from a traditional 401(k) or IRA are usually taxed, so you may need to take out more than you spend.
- Other income. Social Security, pensions or part-time work reduce how much you need to withdraw. Subtract them from your monthly spending before you enter it.
- Required minimum distributions and big one-off costs like a new roof or medical bills.
This is a planning estimate, not financial advice. For decisions about your retirement, talk to a fee-only financial planner.