Retirement Withdrawal Planner
See how long a retirement pot lasts at a given withdrawal rate, or what it can sustainably pay out, including why the order of returns matters so much.
Figures are in today's dollars only if your growth rate is the return above inflation. Using a nominal return overstates how far the money goes — a 5% real return is optimistic; 3–4% real is a common planning range.
The 4% rule, briefly
The classic guideline: withdraw 4% of the starting balance in year one and adjust for inflation after that, and a balanced portfolio has historically lasted 30+ years. For a $500,000 nest egg that is $20,000 a year. It is a planning anchor from historical US returns — not a guarantee, and sequence-of-returns risk (bad markets early) is the main way real retirements deviate from it.
The same returns in a different order: broke in year 10, or three million
Start with $1,000,000, withdraw $40,000 a year — the 4% rule — and run it through 30 annual returns averaging 6.06%. Then run the identical returns sorted differently:
| Order | Outcome |
|---|---|
| worst years first | ran out in year 10 |
| as generated | survived, ending at $2,253,495 |
| best years first | survived, ending at $3,068,976 |
Same numbers, same mean, same thirty years — both asserted, not assumed. The only difference is which year each return landed in, and it is the difference between running dry a third of the way through and finishing with three million.
It is the withdrawals, not the returns
The control makes it airtight. Take the same returns, make no withdrawals at all, and the order stops mattering completely:
| Order, no withdrawals | Final balance |
|---|---|
| worst years first | $4,004,459 |
| best years first | $4,004,459 |
Identical to the dollar, because multiplication commutes. Nothing about the returns themselves causes the effect above — it appears only once money is coming out.
The mechanism is simple once stated. A withdrawal in a down year sells a larger slice of the portfolio, and those units are then not there to recover. A bad year early gets compounded by every good year that follows it; a bad year late has almost nothing left to damage.
The first five years decide it
Running 2,000 different return sequences through the same plan, 1,885 lasted the full 30 years — 94.3%, which sounds reassuring on its own. Split those runs by how the opening five years went:
| First five years | Runs | Survived |
|---|---|---|
| averaging negative | 260 | 71.2% |
| averaging positive | 1,740 | 97.7% |
A gap of 27 percentage points. Roughly one plan in four that started badly did not make it, against one in forty of those that started well. The date you happen to retire is not a financial decision anybody controls, and it matters more than almost everything that follows it.
Which is the caveat to put on the number this page gives you. A single growth rate produces a single answer, and it is the answer for the average case — it cannot show you the spread, and the spread is the whole question. Of the sequences that failed here, the earliest ran dry in year 14 and the median in year 23.
So read "your money lasts 30 years" as "your money lasts 30 years if the returns arrive in a helpful order". The plan is not wrong; it is one draw from a distribution, and this page cannot draw it twice.
How to use
- Enter your starting balance and expected return.
- Set your annual withdrawal and inflation rate.
- Read how long the balance lasts.
- Test a lower withdrawal to see the difference.
Frequently asked questions
What is the 4 per cent rule?
A finding from research by William Bengen in 1994 that a portfolio withdrawing 4 per cent of its initial value, adjusted annually for inflation, survived every historical 30-year period tested. It is a useful benchmark and not a guarantee — it rests on a particular market history, a particular asset mix and a 30-year horizon.
Why does the order of returns matter?
Because withdrawals and losses compound against each other. A poor run early in retirement removes capital that would otherwise have recovered, and the same sequence of returns in a different order can produce a completely different outcome. This is called sequence-of-returns risk, and it is why the early years of retirement carry disproportionate weight.
Should I adjust withdrawals for inflation?
Any realistic plan has to. A fixed nominal withdrawal loses purchasing power steadily — at 3 per cent inflation, roughly half over 25 years. Increasing withdrawals to keep pace is what makes the projection meaningful, and also what makes it demanding on the portfolio.
What happens if I withdraw more than 4 per cent?
Depletion risk rises sharply and non-linearly. Small increases in the withdrawal rate shorten the expected lifespan of the portfolio considerably, particularly if a poor market period arrives early. Many retirees vary withdrawals with market conditions rather than holding a fixed rate.
Does this account for taxes?
No, and the effect can be substantial. Which account the money comes from determines the tax treatment, and the sequence in which different accounts are drawn down can materially change how long the total lasts. That planning is specific to your circumstances and jurisdiction.
Can I rely on this projection?
No. It assumes a constant return, which markets do not provide, and it knows nothing about your tax position, other income, health costs or how long you will live. It is useful for comparing scenarios and is not financial advice — decisions of this size warrant a qualified adviser.
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