Calculator Panel
Calculation Ready
Enter your values above and click Calculate.
What This Calculator Does
This calculator runs a detailed annual depletion simulation to show exactly when your retirement nest egg will run out under inflation and investment compounding.
How to Use This Calculator
Enter your starting portfolio value, your desired initial monthly withdrawal, expected annual investment return, and annual inflation rate, then click Calculate.
How the Calculation Works
The underlying math engine processes your inputs using exact formulas. This systematic approach ensures professional, institutional-grade calculation precision:
Mathematical Formula
Formula Legend:
- · Previous Balance = The remaining portfolio capital at the start of the year.
- · Annual Withdrawal = Desired monthly draw multiplied by 12, adjusted annually for inflation.
- · r = Expected annual portfolio growth rate.
Practical Example
Suppose you have an $800,000 portfolio, want to withdraw $3,500/month ($42,000/year), expect a 6.0% return, and a 2.5% inflation rate:
Step-by-Step Mathematical Walkthrough:
- 1 In Year 1, you withdraw $42,000. Your remaining $758,000 compounds at 6% to end the year at $803,480.
- 2 In Year 2, your annual withdrawal increases by 2.5% inflation to $43,050. Your remaining balance is invested and compounds.
- 3 In Year 10, your annual withdrawal has risen to $52,452 due to inflation.
- 4 Running this year-by-year calculation shows that your $800,000 portfolio will fully fund your lifestyle for 28.5 years before hitting zero.
Important Assumptions & Notes
- Withdrawals are made at the beginning of each year for conservative planning.
- The inflation rate remains stable and is applied consistently every year.
Common Mistakes or Considerations
- Assuming a high rate of return in retirement without factoring in down years or market corrections.
- Failing to account for the impact of inflation on your desired spending power.
Frequently Asked Questions
What is sequence of returns risk?
The risk that severe market downturns occur in the early years of your retirement. If you must withdraw fixed amounts while your portfolio is shrinking, you deplete your capital faster, which significantly shortens how long your nest egg lasts.
How can I make my portfolio last longer?
By reducing your monthly withdrawal, working part-time to add supplemental income, or shifting a portion of your portfolio into assets with higher growth potential (while managing volatility).