Retirement Withdrawal Calculator

How is the year-by-year withdrawal balance calculated?

Each year the account earns the annual return on the opening balance, and then the inflation-adjusted withdrawal is deducted. In formula form: B[n] = B[n-1] × (1 + r) − W × (1 + i)^(n−1). Year 1 withdrawal is W, year 2 is W × (1 + i), year 3 is W × (1 + i)², and so on.

The two effects compound in opposite directions — the balance grows if r > i × (W/B), but shrinks when the adjusted draw overtakes the return.

The end-of-year timing convention means the return is credited first, then the withdrawal is deducted — the same timing Bengen used in his 1994 study, where the planner's client takes the first withdrawal "at the end of the first year". A calculator that withdraws at the start of each year will show a slightly shorter run for the same inputs, because every withdrawal misses one year of growth.

The model is deterministic: a single constant return replaces the actual year-to-year variation in portfolio returns. That is the model's most important limitation, stated beside every result on this page.

Should I solve for how long, how much or what balance?

"How long?" takes a balance and an annual withdrawal and finds the year the money runs out. Use this to stress-test a spending plan: enter what you plan to spend each year and see how many years of retirement that funds at your assumed return.

"How much?" takes a balance and a target horizon and finds the first-year withdrawal that leaves exactly zero after that many years. With no inflation it is the present-value annuity: W = B × r ÷ (1 − (1+r)^(−N)), so $500,000 at 6% for 30 years gives $36,324 a year. With inflation the withdrawal is indexed, so the closed form becomes W = B × (1+r)^N ÷ S, where S adds up the growth of every indexed withdrawal to the horizon; at 2.5% inflation the same $500,000 supports $27,568 in year 1, rising each year.

"What balance?" is the reverse: given a desired annual spending and a target horizon, it finds the starting portfolio you need. At 6% return and 30 years, $40,000/year requires $550,593 — not $1,000,000. The "25× rule" gives $1,000,000 because it assumes a 4% return. The difference shows why the rule of thumb and the accurate formula produce very different answers under your own assumptions.

What does a constant return leave out?

This model uses a single annual return for every year of the plan. Real portfolios return +28% in good years and −22% in bad ones. Sequence-of-returns risk is the phenomenon where bad returns early in retirement deplete the balance faster than the constant-return model predicts — even if the average return over 30 years matches your input.

The practical implication: a 6% average return with high variance can exhaust a portfolio years earlier than the model shows. The Bengen and Trinity studies tested a constant withdrawal against historical sequences of actual returns. For a deeper look at that historical evidence, see the safe-withdrawal-rate calculator.

No Monte Carlo or probability-of-success estimate is shown here. The constant-return result is the clearest way to understand the maths of the withdrawal path, and stating the limitation beside the result is more honest than embedding a simulation that most readers cannot interrogate.

How do taxes and the 59½ rule affect withdrawals?

Traditional IRA and 401(k) withdrawals are taxed as ordinary income. The flat rate in the Advanced section is a planning estimate: enter your expected effective rate (blended across brackets), not your marginal rate, for a rough after-tax figure. For a precise bracket-by-bracket breakdown see the tax-bracket calculator.

Withdrawals from traditional retirement accounts before age 59½ are generally subject to a 10% additional tax under IRC §72(t), on top of ordinary income tax. Exceptions include permanent disability, distributions to an IRS levy, certain medical expenses, and substantially equal periodic payments (SEPP). The calculator names the penalty and links IRS Topic 558 — it does not model the penalty, because it does not know the reader's age or distribution type.

Roth IRA qualified distributions are tax-free; Roth 401(k) distributions were RMD-exempt from 2024 under SECURE 2.0 §325. Use the tax-bracket calculator for a more complete after-tax estimate.

How do I read the schedule and the chart?

The balance chart shows the nominal portfolio value (the solid blue line) and, when inflation is above zero, the inflation-adjusted "today's dollars" value (the dashed green line). The gap between them grows each year — the real purchasing power of the account declines faster than the nominal number suggests.

The year-by-year table shows the opening balance, the gross annual withdrawal (before tax), the net withdrawal (after the tax rate you entered), and the closing balance. In the year of exhaustion the closing balance reads "$0 — exhausted".

The KPI grid shows the first-year withdrawal and the year-25 withdrawal (or the last available year for shorter horizons). Both are nominal — the dollars of that year. Comparing the two shows how much more the inflation-indexed draw costs in nominal terms while buying exactly what year 1 bought: at 2.5% inflation, a $25,000 year-1 withdrawal is $45,218 in year 25 ($25,000 × 1.025²⁴). Nothing on this page mixes the two: every table figure is nominal, and only the dashed chart line is restated in today's dollars.