Safe Withdrawal Rate Calculator

What This Calculator Does

You have $1,000,000 saved for retirement. How much can you spend each year without running out of money? The safe withdrawal rate answers that question. This calculator simulates year-by-year withdrawals from your portfolio, grows the remaining balance by your expected return, and increases withdrawals each year to keep pace with inflation.

The Safe Withdrawal Rate Calculator takes your portfolio value, a withdrawal rate, expected investment return, inflation rate, and retirement length. It shows your first-year withdrawal amount, the monthly equivalent, whether the portfolio survives the full period, the ending balance, and a year-by-year chart of the portfolio balance and rising withdrawal amounts.

The 4% rule, the most widely cited safe withdrawal rate, comes from William Bengen's 1994 research and the 1998 Trinity Study. According to Morningstar's 2026 State of Retirement Income report, forward-looking analysis using current market valuations suggests that 4% may be too aggressive. Their research, along with Monte Carlo simulations using J.P. Morgan's 2026 capital market assumptions, points to 3% to 3.5% as a safer starting withdrawal for a 30-year retirement at high confidence levels.

Inputs Required

• Portfolio Value: The total amount you have saved for retirement
• Withdrawal Rate: The percentage of the portfolio you withdraw in the first year (subsequent years are adjusted for inflation)
• Expected Annual Return: The average yearly return on your investments during retirement
• Inflation Rate: The annual rate at which your withdrawals increase to maintain purchasing power
• Retirement Length: The number of years you need the portfolio to last

Outputs Provided

• Annual Withdrawal (Year 1): The dollar amount you can withdraw in the first year
• Monthly Withdrawal: The annual amount divided by 12
• Portfolio After Retirement Period: The remaining balance, or $0 if depleted
• Total Withdrawn: The cumulative amount withdrawn over the entire period
• Required Portfolio Multiple: How many times your annual expenses you need saved (for example, 25x at 4%)
• Real Return Rate: Your nominal return minus inflation, which is the growth that sustains the portfolio
• Balance Chart: Year-by-year portfolio balance and inflation-adjusted withdrawals

How the Calculation Works

The calculator uses a deterministic year-by-year simulation. In year 1, you withdraw the specified percentage of the portfolio. The remaining balance then grows by the expected annual return. In year 2, you withdraw the same dollar amount as year 1 plus an inflation adjustment. This repeats each year.

This mirrors the Bengen method: a constant real withdrawal amount that rises with inflation. The key insight is that the real return rate (nominal return minus inflation) determines whether the portfolio survives. If your real return is positive and large enough, the portfolio grows even as you withdraw. If the real return is near zero or negative, withdrawals steadily drain the portfolio.

How to Use the Calculator

1. Enter your total retirement portfolio value.
2. Set a withdrawal rate. Start at 4% for the traditional rule, then try 3.5% and 3% to see how much safer they are.
3. Enter your expected annual return. A 60/40 stock-bond portfolio might return 5% to 7%. Use a conservative number.
4. Set the inflation rate. The long-term U.S. average is about 3%. Current CPI as of July 2026 is 3.4%.
5. Set your retirement length. 30 years is standard. Use 40 or 50 if you retire early.
6. Check whether the portfolio survives. If the ending balance is $0, the withdrawal rate is too high for those assumptions.

To find the portfolio size you need for a target withdrawal, use our FIRE Calculator. For a full retirement projection including Social Security, use our Retirement Calculator.

Example Calculations

Example 1: The Traditional 4% Rule

Robert, age 65, has $1,000,000 saved. He withdraws 4% ($40,000) in year 1. His portfolio earns 7% and inflation is 3%. After 30 years, the calculator shows the portfolio still has a balance of approximately $1,850,000. Total withdrawals over 30 years were about $1,900,000. The portfolio survived comfortably because the 7% return outpaced the 4% withdrawal plus 3% inflation. This is the scenario where the 4% rule works well: returns exceed the combined withdrawal and inflation drag.

Example 2: The Lower Return Scenario

Same $1,000,000 portfolio, but returns are only 5% (a more conservative estimate given current valuations). Inflation stays at 3%. At 4% withdrawal, the portfolio survives 30 years but ends with only about $380,000. At 5% withdrawal, the portfolio runs out in year 23. At 3.5% withdrawal, the portfolio ends with about $730,000. This shows why Morningstar and other researchers recommend 3% to 3.5% when forward-looking returns are lower than historical averages.

Real World Scenarios

The Early Retiree With a 50-Year Horizon

Linda retires at 50 with $1,500,000. She needs the portfolio to last 50 years, not 30. At 4% withdrawal ($60,000/year), 7% return, and 3% inflation, the calculator shows the portfolio surviving with about $5,200,000 remaining. But this assumes steady 7% returns every year. In reality, a market crash in the first few years of retirement (sequence of returns risk) could deplete the portfolio much faster. Early retirees often use 3% or 3.5% to account for the longer horizon and sequence risk. At 3.5%, Linda withdraws $52,500 in year 1 and the portfolio ends with about $6,800,000 under the same assumptions.

High Inflation Stress Test

A retiree with $800,000 withdraws 4% ($32,000) at 7% return. With normal 3% inflation, the portfolio lasts 30 years. But if inflation spikes to 5% (as it did in 2022), the withdrawals grow much faster. By year 15, the annual withdrawal has risen from $32,000 to about $66,000. The portfolio runs out in year 24. This is why inflation is the silent killer of retirement portfolios. Testing your plan with higher inflation rates reveals how much margin of safety you have.

The Conservative 3% Withdrawal

A couple with $2,000,000 chooses a 3% withdrawal rate ($60,000/year) at 6% return and 3% inflation over 40 years. The portfolio not only survives but grows, ending at approximately $3,400,000. Total withdrawals over 40 years are about $4,500,000. The tradeoff is that they withdraw less than they could have, but they have near-certainty of not running out. This is the approach recommended by researchers who believe forward-looking returns will be lower than historical averages.

Common Mistakes to Avoid

• Ignoring sequence of returns risk: This calculator uses a constant return every year. In reality, a market crash early in retirement is far more damaging than one late in retirement, because you are withdrawing from a shrinking portfolio. A 4% plan that survives with steady 7% returns may fail if the first 5 years include a 30% drop. Consider Monte Carlo simulations or a lower withdrawal rate to account for this.
• Using historical returns for forward-looking planning: The 4% rule was based on U.S. returns from 1926 to 1995, a period of exceptional growth. Current stock valuations are high and bond yields, while improved, may not sustain historical bond returns. Forward-looking estimates from Morningstar and J.P. Morgan suggest lower returns, which means lower safe withdrawal rates.
• Forgetting that withdrawals increase with inflation: A $40,000 withdrawal in year 1 becomes $96,000 by year 30 at 3% inflation. Many people underestimate how much their withdrawals will grow. The calculator shows this in the chart, where the dashed withdrawal line rises each year.
• Not accounting for taxes: Withdrawals from traditional 401(k) and IRA accounts are taxed as ordinary income. If you need $40,000 after taxes from a pre-tax account, you may need to withdraw $50,000. Roth accounts have no tax on qualified withdrawals. Your effective withdrawal rate should account for the tax drag.

Limitations of This Calculator

This tool uses a deterministic simulation with constant annual returns. It does not model market volatility, sequence of returns risk, or Monte Carlo probability analysis. It does not account for taxes, required minimum distributions, Social Security income, pension income, or variable spending strategies. The constant return assumption makes the results optimistic compared to real-world conditions where returns fluctuate. For retirement income planning, consider combining this tool with a Monte Carlo analysis and a consultation with a financial advisor. For required minimum distributions from pre-tax accounts, use our RMD Calculator.

Authoritative Research and Resources

• Morningstar: The State of Retirement Income (2026) - Annual research using forward-looking return estimates to calculate safe withdrawal rates. Finds that 4% may be too aggressive and recommends lower rates for high confidence.
• AAII: The Trinity Study and Portfolio Success Rates - An overview of the 1998 Trinity Study by Cooley, Hubbard, and Walz, which tested historical withdrawal rates against U.S. stock and bond returns and established the 4% guideline.

For related tools, try our FIRE Calculator to find your target portfolio size, our Retirement Calculator for a full retirement projection, or our Inflation Calculator to see how inflation affects purchasing power.