How the calculator works out how long savings last
A pot of savings that keeps earning a return while you draw on it shrinks more slowly than the withdrawals alone suggest. The calculator follows the balance one month at a time, with a return and an amount you choose, until the money runs out or a hundred years have passed.
r = R ÷ 12: the monthly return, whereRis the yearly return you enter. It is applied every month to whatever is left.B = B × (1 + r) − W: each month the return is added first and the withdrawalWis taken at the end of the month.W = W × (1 + i)every 12 months, when you enter an inflation ratei: the withdrawal keeps its purchasing power by rising once a year.- When the balance can no longer cover a whole withdrawal, that month pays what is left and the balance is zero. The result counts only the months with a full withdrawal.
Without inflation adjustment there is a closed form: months = −ln(1 − r × B ÷ W) ÷ ln(1 + r). It only has an answer when the withdrawal is larger than the first month's return, W > r × B. At or below that amount the return replaces every withdrawal, the balance never falls and the calculator says so instead of showing an endless number. With inflation adjustment the withdrawal keeps growing, so the calculator simply runs the months; if the money is still there after 100 years, it reports that rather than a figure it cannot reach.
Returns-then-withdrawal is the order the SEC's Investor.gov Compound Interest Calculator uses when you enter a negative monthly amount, and the two calculators agree to the cent. Amounts are not rounded month to month, only in the results.
Worked example: $500,000.00 drawn at $3,000.00 a month
Entering $500,000.00, a monthly amount of −$3,000.00, 20 years, 5% and monthly compounding in the Investor.gov calculator returns $123,219.14 left after 20 years. Working through it:
- Monthly return: 5% ÷ 12 = 0.00416667. In the first month that earns $2,083.33, less than the $3,000.00 withdrawn, so the balance falls by $916.67.
- Each month the balance is lower, the return is smaller and the fall is larger. After 20 years the balance is $123,219.14, the same amount Investor.gov returns.
- Continuing, the money covers 285 full withdrawals (23 years 9 months), and a last, partial withdrawal of $427.00.
- Over that time $855,427.00 is withdrawn: the $500,000.00 you started with plus $355,427.00 of returns.
A balance that runs out: $200,000.00 at $2,000.00 a month
With $200,000.00, $2,000.00 a month and 4%, Investor.gov shows $3,666.93 left after 10 years, and so does this calculator. That covers 1 more full month; the next month pays only $1,684.75, so the result is 10 years 1 month.
How the withdrawal, the return and inflation change the result
The calculator opens with $500,000.00, $3,000.00 a month, a 5% return and no inflation adjustment: the money lasts 23 years 9 months. The return and inflation figures are starting values to edit, not a forecast; investment returns vary from year to year and can be negative.
The withdrawal
- $2,500.00 a month: 35 years 10 months.
- $3,000.00 a month: 23 years 9 months.
- $3,500.00 a month: 18 years 1 month.
- $4,000.00 a month: 14 years 8 months.
At 5%, $500,000.00 earns about $2,083.33 in its first month. Without inflation adjustment, a withdrawal up to that amount is replaced by the return every month and the balance never falls; each amount above it eats into the savings, faster the further above it is.
The return
- 0% a year: 13 years 10 months.
- 3% a year: 17 years 11 months.
- 5% a year: 23 years 9 months.
- 7% a year: 51 years 4 months.
At 0% the result is simply the savings divided by the withdrawal. A real portfolio does not earn the same return every year, and the order matters: losses early in retirement, while the balance is largest, shorten the result more than the same losses later. A constant rate cannot show that; entering a lower rate shows how much a weaker run of returns would shorten the result.
Inflation
- Withdrawals raised 2% a year: 18 years 3 months, with the monthly amount reaching $4,284.74 in the last year.
- Withdrawals raised 3% a year: 16 years 7 months, with the monthly amount reaching $4,814.12 in the last year.
Leaving inflation at 0% keeps the same amount of money every month, which buys less each year. Entering an inflation rate keeps the spending power level instead, at the cost of the savings running out sooner.
Frequently asked questions
What is the 4% rule?
It is the popular name for the finding of a 1994 study by the financial planner William Bengen in the Journal of Financial Planning. Using historical U.S. market returns from 1926 onward and a portfolio of half stocks and half intermediate-term Treasuries, he found that a first-year withdrawal of 4% of the savings, raised with inflation afterwards, had never run out in less than 33 years. It is a research finding about past markets, not an official guideline or a guarantee. For comparison, 4% of $500,000.00 is $1,666.67 a month; at a constant 5% this calculator gives more than 100 years without inflation adjustment and 35 years 9 months with 3% a year.
What withdrawal rate does my input mean?
The result shows the first-year withdrawal as a share of the savings: twelve monthly withdrawals divided by the starting balance. For the opening example that is 7.2%. It lets you compare your plan with figures quoted as a percentage of savings.
Should the withdrawal include a pension or Social Security?
Enter only what you take from these savings. If part of your spending is paid by a pension, a state pension or Social Security, subtract that income first and enter the remainder as the monthly withdrawal.
Are taxes and fees included?
No. If withdrawals are taxed, the amount you take out has to be larger than the amount you spend; enter the larger figure. Account or fund fees can be allowed for by entering the return after fees.
Why is the last month counted separately?
Savings rarely run out exactly at the end of a month. The calculator counts the months in which the full amount could be paid and shows the smaller amount left for the final month, so the result never overstates how long a full withdrawal lasts.
Sources
- U.S. Securities and Exchange Commission, Investor.gov Compound Interest Calculator — a negative monthly amount is a withdrawal; the $123,219.14 and $3,666.93 results above (inputs entered on October 7, 2026).
- William P. Bengen, “Determining Withdrawal Rates Using Historical Data”, Journal of Financial Planning, October 1994 (reprinted 2004) — a study of historical returns by a financial planner, published in the Journal of Financial Planning, the origin of the “4% rule”; not an official calculation.