Retirement Withdrawal Calculator

Three numbers decide it: the starting balance, the withdrawal rate, and the return earned on what remains. A portfolio drawn at 4% a year with a 6% return grows slowly in nominal terms and lasts indefinitely in most scenarios; drawn at 8% it typically empties inside twenty years regardless of a reasonable return assumption.

Inflation is the fourth variable and the one most often left out. A withdrawal that keeps pace with prices rises every year, so a plan that looks sustainable in flat dollars can fail in real ones.

The years immediately after you stop working matter disproportionately. Selling assets to fund income during a bear market permanently removes capital that would otherwise have participated in the recovery, and no subsequent good run fully replaces it.

The standard defences are a cash buffer of one to three years' spending, a bond allocation that can be drawn on instead of equities, and a willingness to reduce spending temporarily. Retiring into a strong market and retiring into a crash can produce completely different outcomes from identical portfolios and identical long-run average returns.

The conventional order is taxable accounts first, then tax-deferred, then Roth — maximising the time that sheltered money compounds. It is a reasonable default and not always optimal.

Early retirement years before Social Security and required minimum distributions begin are often the lowest-tax years of your life, and deliberately realising traditional-account income or doing Roth conversions in them can avoid a much higher bracket later. Ignoring that window frequently means paying more tax overall while feeling like you optimised.

Traditional IRAs and 401(k)s require withdrawals from your early-to-mid seventies, calculated from the prior year-end balance and an IRS life-expectancy factor. The penalty for missing one is severe, and the distribution is ordinary income whether or not you need the cash.

A large untouched traditional balance is therefore a deferred tax bill, not an avoided one — and it can push Social Security into taxability and raise Medicare premiums via IRMAA. Roth accounts have no lifetime RMD, which is one of the strongest arguments for holding some Roth money at retirement.

The most durable approach in practice is not a fixed percentage but a rule with bands: withdraw a target rate, skip the inflation increase after a year in which the portfolio fell, and take a modest raise after a strong one.

That single behavioural adjustment improves portfolio survival more than most allocation changes, because it makes spending respond to reality. Build the flexibility in before you need it — deciding to cut spending during a crash is much harder than having agreed the rule in advance.