Take a nest egg, withdraw a percentage each year, raise that withdrawal with inflation, and find out whether the money outlives you. This is the classic 4% rule, stress-tested against your own assumptions.
The 4% rule comes from research by William Bengen in 1994 and the later Trinity University study. The idea is simple: withdraw 4% of your portfolio in the first year of retirement, then raise that dollar amount every year to keep pace with inflation. Historical market data suggested that a balanced portfolio could sustain this pattern for at least thirty years in nearly every period tested. The rule turned an intimidating question, "how much can I safely spend?", into a single multiplier: twenty-five times your annual expenses.
The calculator applies exactly that logic to your numbers. It takes your starting balance, computes the first-year withdrawal, then each year it grows your remaining balance by your expected return, subtracts the withdrawal, and increases the withdrawal by inflation. The year-by-year schedule shows precisely where the balance heads, including the year it runs dry if it does.
The loop repeats for every year you model. If the balance survives to the final year, the plan holds under your assumptions; the leftover balance is your margin of safety. If any year ends below zero, the schedule shows the depletion year, which tells you how much the plan needs to change: a lower withdrawal rate, higher returns, later retirement, or supplemental income.
The rule is a starting point, not a guarantee. Its biggest weakness is sequence-of-returns risk: a deep market crash in the first years of retirement does far more damage than the same crash later, because withdrawals lock in losses while the portfolio is down. The historical studies also rest on US market data from periods that included strong bull markets, so past survivability says less about the future than people assume. Early retirees face an extra problem: a thirty-year horizon barely covers retiring at sixty, and retiring at forty-five means the money must last much longer, which is why many FIRE followers target a 3% to 3.5% initial rate instead. Finally, the rule ignores taxes, fees, and required minimum distributions, all of which push the safe rate lower.
Run the calculation a few ways. Try a pessimistic return a couple of points below your base case and see whether the plan still holds. Test a 3% and a 3.5% withdrawal rate to see how much safety buffer they buy. Remember that spending is rarely flat: most retirees spend more in active early years and less later, and many have pensions, Social Security, or part-time income that covers part of the budget, reducing the pressure on the portfolio. A plan that survives your pessimistic scenario is far more convincing than one that only works when everything goes right.
It is a reasonable baseline, not a promise. Later research using international data and updated market valuations often lands between 3% and 3.5% for portfolios that must last thirty years or more. Using 4% with a flexible spending plan, where you cut back after bad market years, is a defensible middle ground.
For retirements lasting forty or fifty years, most planning uses 3% to 3.5%. The longer horizon means more years exposed to bad sequences of returns. Pair a lower rate with a spending floor, such as covering essentials from bonds or cash, to reduce the risk of depleting the portfolio early.
In real life it should follow actual CPI inflation, which varies year to year. This calculator uses a single assumed inflation rate to keep the schedule simple. If inflation runs hotter than your assumption, real spending power erodes faster than shown, so it pays to test a higher inflation scenario too.
Treat guaranteed income as covering part of your annual spending, then withdraw only the remainder from your portfolio. That effectively lowers your withdrawal rate on the portfolio, which is one of the strongest levers for making a plan safer. This calculator models a portfolio in isolation, so subtract your guaranteed income from your expenses before choosing a withdrawal rate.
Yes. The original studies assumed roughly 50% to 75% stocks. All-cash portfolios almost never sustain 4% because returns lag inflation, while very aggressive stock allocations survive the average case but fail more often in bad sequences. The expected return input here is where you encode your allocation, so be honest and conservative about it.