How the drawdown is calculated
Each year the calculator grows your savings by the return, takes out that year's spending, and then raises the spending by inflation for the next year so your lifestyle stays the same in real terms. Withdrawals are spread across the year, so the money taken out later in the year still earns some return first. It repeats until the balance runs out.
With $500,000, spending $35,000 a year (a 7% first-year withdrawal rate), a 6% return and 3% inflation, the money lasts about 19 years. Drop spending to $25,000 and it lasts about 31 years. The bars show the balance every five years.
The order of returns matters
A steady average return is a simplification. In reality, poor returns early in retirement do far more damage than poor returns later, because you are selling investments while prices are low. This is called sequence-of-returns risk, and it is the main reason withdrawal-rate guidelines like the 4% rule build in a margin of safety. Keeping a year or two of spending in cash or bonds, and being willing to trim spending in bad years, both help.
Common questions
How long will $500,000 last in retirement?
Spending $30,000 a year with a 6% return and 3% inflation, about 24 years. At $20,000 a year it lasts about 46 years.
How long will $1 million last?
At $50,000 a year with the same assumptions, roughly 30 years. At $40,000 it lasts about 46 years.
What return should I use in retirement?
Portfolios usually get more conservative in retirement. 4% to 6% before inflation is a common planning range.
This calculator gives estimates for planning. Real returns, rates and prices change, so treat the result as a guide rather than a promise. Read how we build and check our calculators.