Your withdrawal rate is the percentage of your portfolio that you spend each year. It is calculated by dividing your annual withdrawal by your total portfolio balance. A $40,000 withdrawal from a $1,000,000 portfolio is a 4% withdrawal rate. This percentage is the single most important factor in determining how long your money lasts.

Inflation is the hidden threat to retirement portfolios. Even at a modest 3% annual rate, inflation cuts the purchasing power of your money in half over roughly 24 years. That is why this calculator increases your withdrawal amount each year by the inflation rate, simulating real-world conditions where you need to spend more each year just to maintain the same standard of living.

The interplay between portfolio returns and withdrawals determines your outcome. If your portfolio earns 7% and you withdraw 4% adjusted for 3% inflation, the real return barely covers the draw. Sequence of returns risk, where poor early returns deplete a portfolio faster than average returns suggest, makes real-world outcomes less predictable than any calculator can show. Consider this tool a starting point and consult a financial advisor for personalized guidance.