Savings withdrawal calculator

What this number means

This is the month the balance reaches zero if the return holds and the withdrawal never changes. The final withdrawal is usually smaller than the rest, because it is whatever is left.

If the answer is that the pot never runs out, the interest is covering the draw. That is a real result and worth understanding: at a fixed rate, any withdrawal below the monthly interest leaves the balance growing indefinitely. It is also the point at which the limitations below start to matter more than the arithmetic, because a fixed rate held for decades is an assumption rather than a fact.

What this cannot tell you is whether the withdrawal is the right one. That depends on tax, other income, and how long you need the money to last, none of which a calculator can see.

How this is calculated

Each month, in this order:

• Interest is added: balance multiplied by the annual return divided by 12.
• The withdrawal is taken from the total.
• The remainder carries into the next month and earns interest again.

Before the loop runs, the first month of interest is compared against the withdrawal. If the interest is the larger, the balance can never fall, and the page says the pot does not run out. It does not iterate to an arbitrary limit and report a number.

Interest is rounded to whole cents as it is credited, matching how a bank posts it.

This is standard annuity arithmetic. The withdrawal-at-period-end convention is the one used in the future value of an ordinary annuity, as distinct from an annuity due where payments fall at the start.

No regulator defines this calculation. It is the standard annuity formula from financial mathematics, and saying so is more useful than pointing at an agency that does not govern it. Where a rule does apply on this site we name it: the APY page follows Regulation DD, and the credit card pages follow Regulation Z.

So the arithmetic here is checkable and the assumptions are ours. They are listed above and under the limits below, and the two conventions that matter, when money moves and how interest rounds, are stated rather than left for you to infer.

What this does not account for

• Inflation. The single biggest omission over a long drawdown. A fixed 1,500 a month buys materially less after twenty years.
• Returns that vary. A fixed rate is a reasonable model for a CD or a savings account, and a poor one for investments. Two portfolios with the same average return but different sequences of good and bad years do not last the same length of time when you are withdrawing from them.
• Tax. Withdrawals from a traditional retirement account are generally taxable income; from a Roth they generally are not; from a taxable account only the gains are. This models none of that.
• Required minimum distributions, which can force withdrawals larger than you planned.
• Other income such as social security or a pension, which usually changes the withdrawal needed.
• Fees on the account or the investments inside it.

Questions

What does "never runs out" mean here?

It means the interest the balance earns each month is at least as much as you are taking out, so the balance holds steady or grows. At a 6 percent rate, 100,000 dollars earns about 500 a month, so a 500 dollar withdrawal is exactly break-even and anything less leaves the pot growing. This is arithmetic about a fixed rate, not a promise: rates change, and inflation means a fixed withdrawal buys less every year.

Does this account for inflation?

No, and that is a significant limitation over a long drawdown. Everything here is in nominal dollars. If you withdraw a fixed 2,000 a month for 25 years, the last payment buys far less than the first. A common way to handle this is to enter a rate reduced by your inflation assumption, which gives you a rough answer in today’s money.

Is this a retirement calculator?

Only in the narrowest sense. It answers how long a pot lasts at a fixed withdrawal and a fixed return. Real retirement planning involves social security, taxes on different account types, required minimum distributions, market returns that vary year to year, and a time horizon nobody knows. This is one input to that, not a substitute for it.

Why do withdrawals come out at the end of the month?

Because that is the convention this page uses and it is the conservative one: the balance earns its interest for the month before the withdrawal is taken. Taking the money at the start instead shortens the answer slightly. Most calculators do not say which they use.