Retirement Withdrawal Calculator

How to calculate Retirement Withdrawl Calculator?

This calculator converts your retirement savings into a sustainable annual withdrawal using expected investment returns, inflation, and the number of retirement years.

Key formula (use the real return): r_real = (1 + investment_return) / (1 + inflation_rate) - 1; withdrawal = savings * r_real / (1 - (1 + r_real)^{-N})

Using the Retirement Withdrawl Calculator calculator: an example

Example values: savings $500,000; expected return 7%; inflation 2%; duration 25 years.

Step-by-step calculation:

• Compute the real return: r_real = (1+0.07)/(1+0.02) - 1 ≈ 0.049 (4.9%).
• Apply the annuity formula: withdrawal = 500000 * 0.049 / (1 - (1+0.049)^{-25}) ≈ $32,000 initial annual withdrawal.
• Inflation-adjust subsequent withdrawals by ~2% per year to preserve purchasing power.
• Review assumptions every 3–5 years and update inputs if expected returns or inflation change.

Frequently Asked Questions

What is the real return?

The real return adjusts nominal investment returns for inflation and is calculated as (1+nominal_return)/(1+inflation_rate)-1.

Should I use nominal or real returns?

Use real returns for inflation-adjusted withdrawals because they reflect purchasing power; nominal returns ignore inflation and can overstate sustainable spending.

How often should I recalculate my withdrawal?

Recalculate when your financial outlook changes or at least every 3–5 years to ensure assumptions about returns, inflation, and longevity remain appropriate.