How to calculate retirement withdrawal
Year-1 income = savings × withdrawal rate; balance grows at return rate minus inflation-adjusted withdrawals
Worked example. First-year income: $40,000.
Example inputs — Retirement savings: $1,000,000; Annual withdrawal rate (%): 4; Annual return while retired (%): 5; Inflation (%): 3. Starting values are illustrative.
Savings last about 37 years with withdrawals rising with inflation.
From George Guju, founder of Calculyn · Educational calculator guidance, not professional advice.
How it works
The classic 4% rule withdraws 4% of savings in year one, then raises that dollar amount with inflation each year. Lower withdrawal rates and higher returns make money last longer.
Using the retirement withdrawal estimate
A withdrawal-rate scenario translates retirement savings into a first-year income and a simplified longevity estimate. This model withdraws a percentage of the starting balance in year one, then raises that dollar withdrawal with inflation. It does not withdraw the same percentage of the changing balance each year. The projection is useful for understanding spending assumptions, but a smooth fixed return cannot establish that a withdrawal plan is safe in real markets.
Step-by-step inputs
- Retirement savings. Enter savings intended to fund the withdrawals. Keep other income sources and assets not available for spending separate. Starting example: $1,000,000 .
- Annual withdrawal rate (%). Choose the initial annual withdrawal percentage. This sets the first-year dollar withdrawal; later amounts grow with the inflation assumption. Starting example: 4 .
- Annual return while retired (%) (Advanced options). Enter a hypothetical annual return while retired. Constant growth hides volatility, taxes, fees and the order of actual returns. Starting example: 5 .
- Inflation (%) (Advanced options). Enter the annual increase applied to the withdrawal dollars. It raises modeled future spending rather than converting the headline into today's dollars. Starting example: 3 .
Worked example with the starting values
Using the starting inputs, the estimate is First-year income: $40,000 .
First-year income is starting savings multiplied by the withdrawal rate, and monthly income is one-twelfth of that amount. The longevity line then follows the model's annual growth and rising-withdrawal assumptions. The savings-needed line uses the selected initial rate; it is not an independently validated retirement target.
Savings last about 37 years with withdrawals rising with inflation.
- Monthly income (year 1)
- $3,333
- Savings last
- 37 years
- Savings needed for $50k/yr at this rate
- $1,250,000
Compare annual withdrawal rate (%) scenarios
All other inputs stay at their starting values. These are modeled comparisons, not quotes, predictions or individual recommendations.
| Annual withdrawal rate (%) | First-year income |
|---|---|
| 3 | $30,000 |
| 4 | $40,000 |
| 5 | $50,000 |
Make a useful comparison
Test a lower return and higher inflation while keeping the initial spending rate fixed. Those changes show how much the projected duration depends on growth keeping ahead of spending. A single comfortable baseline should not be interpreted as a guaranteed lifespan for the portfolio.
Compare the first-year withdrawal with actual spending after accounting for other retirement income. Pension or public-benefit income may reduce what the portfolio needs to supply, while taxes can increase the gross withdrawal required to fund a net budget.
Consider flexibility in difficult market years. This calculator keeps raising withdrawals with inflation even when a real retiree might change spending. It does not test historical return sequences or adaptive withdrawal strategies, so use it as one scenario rather than a complete retirement plan.
Common mistakes to avoid
- The familiar 4% starting rate is not a universal guarantee. The model's chosen rate is an input, not a validated safe-withdrawal conclusion.
- A strong average return can coexist with early losses that harm sustainability. Sequence-of-returns risk is hidden by constant annual growth.
- Projected duration does not account for all taxes, fees, healthcare shocks or lifespan uncertainty. A monthly income estimate is not necessarily an after-tax paycheck.
Assumptions & limitations
- Steady return and inflation every year
- Withdrawals rise with inflation
- Excludes taxes and fees
Formula and assumptions reviewed October 2026 by the Calculyn team. How we build our calculators
Frequently asked questions
Is the 4% rule still valid?
It's a planning starting point from historical US returns; many planners now suggest 3.5–4% for 30-year retirements.
What about taxes?
Withdrawals from traditional accounts are taxed as income — your spendable income will be lower.
Is the withdrawal a constant percentage every year?
No. The percentage sets the first-year dollars, then the model increases that dollar amount with inflation.
Does the longevity estimate prove the money will last?
No. It is a fixed-assumption projection and does not simulate market volatility or individual future expenses.