Retirement Withdrawal Planning: Key Principles
Your retirement savings last as long as your investments grow faster than you spend. If you withdraw less than what your portfolio earns each year, it can last indefinitely. If you withdraw more, the portfolio gradually depletes β and the calculator shows you exactly when that happens.
The 4% Rule
The Trinity Study found that a 4% annual withdrawal rate (inflation-adjusted) sustained a 30-year retirement in 95%+ of historical market scenarios using a diversified stock/bond portfolio. Your sustainable withdrawal = 4% Γ total savings. For $1M: $40,000/year ($3,333/month).
Withdrawal Rate Impact
| Annual Rate | Risk Level | Typical Duration |
|---|---|---|
| β€ 3% | Very low | Indefinite |
| 3β4% | Low | 30β40+ years |
| 4β5% | Moderate | 25β35 years |
| 5β6% | High | 18β25 years |
| > 6% | Very high | < 20 years |
FAQ
This calculator shows how long your investment portfolio lasts. If you'll receive Social Security, subtract that monthly amount from your total monthly expenses before entering β you only need your portfolio to cover the gap.
Debate exists. Low interest rate environments and higher valuations suggest a more conservative 3β3.5% rate may be safer for longer retirements (35+ years). For 20-year retirements, 4β5% may be acceptable with some flexibility in spending.
β» Uses real (inflation-adjusted) return. Tax impacts and sequence-of-returns risk are not modeled.