Withdrawal Plan Calculator
A withdrawal plan lets you draw a regular monthly income from an invested sum while the remaining balance keeps growing. Enter your starting amount, monthly withdrawal, expected return, and time horizon to see how long your money lasts — and what's left at the end.
Withdrawal plan
Plan steady monthly withdrawals from your investments over time.
FAQs
How much can I safely withdraw each month?
A common rule of thumb is around 4% of the starting balance per year (adjusted over time), which balances income against longevity. Use this calculator to test your specific numbers — the safe rate depends heavily on your expected return and time horizon.
What happens if my investments earn less than expected?
Lower returns mean withdrawals eat into principal faster, so the money may run out sooner than planned. That's why it's wise to test a conservative return rate and keep a cash buffer for down years.
How it works
Here's the core idea: your money earns returns while you withdraw from it. If the returns outpace your withdrawals, the balance can grow even as you take money out; if withdrawals outpace returns, the balance shrinks and eventually runs out. This calculator shows you exactly which path you're on.
Worked example: Start with $100,000 earning 8% a year and withdraw $500 a month for 10 years. You'd collect $60,000 in total withdrawals — and still end with roughly $125,000, more than you started with, because 8% growth outran the withdrawal pace.
The withdrawal rate is the number to watch. Withdrawing 6% a year from a portfolio earning 8% is sustainable; withdrawing 10% a year from one earning 6% drains it fast. Small changes in either number swing the outcome dramatically over long horizons.
Use the calculator to stress-test your plan: try a lower return, a longer time period, or a slightly higher withdrawal to see where the breaking point is. A plan that survives pessimistic assumptions is a plan you can trust.
Turning a Lump Sum Into a Paycheck
After years of building savings, the hardest question is how to spend them: too fast and the money dies before you do; too slow and you live below your means for no reason. A withdrawal plan converts the lump sum into a monthly paycheck with a defined lifespan.
The key insight is that the remaining balance keeps working. You're not just dividing $100,000 by the number of months — growth on the unspent portion can fund years of extra withdrawals, which is why the math surprises most people.
The Withdrawal Rate: The One Number That Rules Everything
Your annual withdrawal as a percentage of your starting balance determines everything. At 4–5% with moderate returns, most plans last decades; at 8–10%, even strong returns can't keep up and the balance collapses.
This is why the first withdrawal decision matters more than fine-tuning investments later. Set a sustainable rate up front, and give yourself a rule for adjusting it — like skipping inflation increases after a bad year.
Planning for the Years Returns Disappoint
Average returns hide ugly sequences: a few bad years early in your withdrawal plan do far more damage than the same bad years later, because you're selling while prices are down. This "sequence risk" is the main reason plans fail.
The defenses are simple: keep 1–2 years of withdrawals in cash so you never sell in a crash, test your plan at below-average returns, and build in flexibility to trim withdrawals temporarily. A plan with shock absorbers lasts; a rigid one breaks.