Safe Withdrawal Rate Calculator

Your safe withdrawal rate is the share of your portfolio you can take out in the first year of retirement, then raise with inflation, without running out of money. The famous 4% rule came from William Bengen's 1994 study of US market history. This calculator tests your own numbers instead: it runs 2,000 simulated retirements with random yearly returns and finds the highest starting rate that survives as often as you require.

How to use this tool

1. Enter your portfolio and the amount you plan to withdraw in year one.
2. Set how many years the money has to last.
3. Enter the average return and volatility you expect for your mix of stocks and bonds, plus inflation.
4. Choose the success rate you are comfortable with and any amount you want left at the end.

Formula

Each year: balance = (balance − withdrawal) × (1 + return) ÷ (1 + inflation)

Withdrawals are fixed in today's dollars and taken at the start of each year. A retirement succeeds if the balance never runs out and ends at or above the amount to leave. The safe rate is found by bisection on the same 2,000 return paths. With volatility set to 0 the answer equals the steady-return rate, the zero-bequest annuity-due formula W = P × (1 − v) ÷ (1 − v^N) with v = 1 ÷ (1 + real return).

Example

With $1,000,000, a 30-year horizon, 7% average return, 12% volatility and 2.5% inflation, the calculator finds a safe withdrawal rate of about 3.50% at a 90% success level, or about $35,046 in the first year. A planned $40,000 (4%) succeeds in about 81.4% of simulations. If every year returned exactly 7%, you could take about 5.81%, which shows how much volatility costs.