How long will the money last?
Spend from a pot while it is still invested, with the withdrawal rising to keep pace with prices.
What you start with, still invested.
In today's money. It rises with inflation automatically.
What the money still invested earns while you draw from it.
Raises next year's withdrawal so your spending power holds steady.
More options(3)
Drawing $24,000 a year from $500,000
32 years 7 mo
Taking $24,000 in the first year — 4.8% of the pot — and raising it 2% a year to keep pace with prices, the money runs out after 32 years 7 mo if returns average 5%. At 2% it would be gone in 21 years 1 mo. That spread is the whole risk: the difference between those two rows is not a rounding error.
- Starting withdrawal rate
- 4.8%
- First-year income
- $24,000
- Income in year 20
- $34,963
Most drawdown calculators draw only the upper line. It is the flattering one, and it assumes the price of everything you buy stays where it is for decades.
If returns average…
Nobody knows which of these happens
| Assumption | How long it lasts |
|---|---|
| 2% a year — cautious | 21 years 1 mo |
| 5% a year — middle | 32 years 7 mo |
| 8% a year — optimistic | Still growing at 60 years |
Markets do not return the same amount every year. The band shows the same plan under three different assumptions, so you can see how much the answer depends on a number nobody knows.
One thing this cannot tell you
Every figure above assumes the return arrives evenly. In real drawdown, the order of returns changes the answer enormously: a bad first few years forces you to sell more units while prices are low, and the pot may never recover even if the average over the whole period is fine. Two retirements with identical average returns can end decades apart. Treat the numbers here as arithmetic, not as a plan.
The withdrawal rises, because prices do
Most drawdown calculators let you enter an annual withdrawal and then hold it flat for thirty years. That is a hidden assumption that prices never move, and it flatters the answer badly.
This one raises your withdrawal every year in line with inflation, so the figure you entered keeps buying the same things. The chart shows both lines precisely so you can see the difference between them — the shaded wedge is what it costs to keep your spending power rather than merely your spending number.
At 2.5% inflation, an income of 24,000 has to become roughly 38,000 after twenty years just to stand still. A plan that quietly assumed 24,000 forever is not a conservative plan; it is a plan with a large error in it.
The withdrawal rate is not the same as the return
A common intuition says that if the pot earns 5% and you take 4%, it lasts forever. Two things break that.
First, inflation: taking 4% rising with prices against a 5% nominal return leaves you roughly 1.5% short once you account for the withdrawal growing. Second, and more seriously, the return does not arrive as a steady 5%.
Why order matters here and not before
While you are contributing, a market fall is not obviously bad — your monthly payments buy more units at lower prices, and the average works itself out. Once you are withdrawing, the same fall forces you to sell more units to fund the same income, permanently reducing what is left to recover.
This is called sequence risk, and it means two retirements with identical average returns can end decades apart depending purely on which years were bad. A smooth-return calculator — this one included — cannot show it. It is the largest single limitation of everything on this page, which is why it is stated on the page rather than in a footnote.
How to use it despite that
Comparatively rather than predictively. The useful questions are relative ones: how much longer does the pot last if I withdraw 10% less? How much does a 0.5% fee shorten it? What does the cautious row look like? Those comparisons hold up even though the absolute number will not be what happens.
Common questions
What return should I assume in drawdown?
Does it account for tax on withdrawals?
What does "still growing at 60 years" mean?
Not advice. This tool applies arithmetic to assumptions you entered. It does not know your circumstances, your tax position or your goals, and it is not a recommendation to buy, sell or hold anything. Past returns do not predict future ones, and no figure here is a forecast.