$40,000
Year 1 annual withdrawal at 4.0%
0%4% rule8%+
Traditional 4% rule range, ~30 years
Starting Portfolio
$1,000,000
Year 1 Withdrawal
$40,000/yr
Monthly Equivalent
$3,333/mo
Based on these assumptions, the portfolio is projected to last the full 30-year horizon, ending with an estimated balance of $1,056,555.
Portfolio Projection
Amounts are shown in future (nominal) dollars, not adjusted for inflation.
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%
4% is the traditional starting point
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%
Applied to each year's withdrawal
yrs
- What is the safe withdrawal rate?
- the safe withdrawal rate is the percentage of your retirement portfolio you withdraw in the first year of retirement, generally increasing that dollar amount for inflation each year after, with a high probability of not running out of money over your retirement.
- The most commonly cited figure is 4%, based on historical research, but the right rate for any individual retiree can reasonably range from about 3% to 5% depending on time horizon, spending flexibility, and guaranteed income like Social Security.
- How does this calculator work?
- Enter either your current portfolio value or a target annual spending level, along with your withdrawal rate, expected return, inflation rate, and retirement horizon. The calculator computes your year one withdrawal (or the portfolio needed to support your target spending), then simulates the portfolio balance year by year, withdrawing an inflation-adjusted amount each year and growing the remainder at your expected return.
- The chart and table show whether the portfolio is projected to last your full retirement horizon, or in which year it's projected to run out under these assumptions.
- What withdrawal rate should I use?
- A 30-year retirement starting around a traditional retirement age is broadly supported by 4% in most historical research. A longer horizon, such as an early retirement lasting 40 years or more, is generally better supported by a lower rate closer to 3-3.5%.
- Your own guaranteed income, spending flexibility, and asset allocation all affect what's realistic for your specific plan. Try a few different rates in the calculator above to see how sensitive your outcome is to that assumption.
- Why does the portfolio run out earlier at a higher withdrawal rate?
- A higher withdrawal rate takes out a larger share of the portfolio in the early years, leaving less remaining principal to benefit from compound growth over time. Combined with inflation increasing the withdrawal amount every year, a rate that's too high relative to your expected return can deplete the portfolio well before the end of a long retirement.
Track your retirement plan over time
Calm Sea tracks your portfolio, cashflow, and net worth across all your accounts in one view.