Safe Withdrawal Rate Calculator

Use this calculator to estimate a sustainable withdrawal rate for a retirement portfolio.

What this calculator does

The safe withdrawal rate calculator estimates an annual withdrawal amount based on portfolio value, retirement length, return, and inflation. It uses a real-return annuity approach.

It uses:

• portfolio value
• years of retirement
• expected annual return
• inflation rate

Safe Withdrawal Rate Formula

PMT = P × (r / (1 - (1 + r)^-n))

Where:

• PMT = safe annual withdrawal
• P = portfolio value
• r = real return after inflation
• n = years of retirement

Example calculation

If:

• Portfolio = 1,000,000
• Retirement length = 30 years
• Expected return = 5%
• Inflation = 2%

Then:

• Real return is about 2.94%
• Annual withdrawal is calculated with the annuity formula
• Safe annual withdrawal is about 50,000
• Monthly withdrawal is about 4,167

The estimated safe withdrawal rate is about 5%.

What is safe withdrawal rate?

Safe withdrawal rate is the percentage of a portfolio that can be withdrawn each year while aiming to avoid running out of money. It depends on returns, inflation, time horizon, and risk tolerance.

Why safe withdrawal rate matters

• connects portfolio size to retirement income
• helps manage longevity risk
• adjusts planning for inflation
• supports spending decisions in retirement

When to use this calculator

• estimating sustainable retirement income
• comparing retirement lengths
• testing return and inflation assumptions
• reviewing withdrawal plans before retirement

Common mistakes

• treating one withdrawal rate as universal
• ignoring inflation
• assuming market returns arrive evenly
• withdrawing too much after portfolio losses

Safe withdrawal rate vs 4% rule

Safe withdrawal rate is a flexible calculation based on assumptions. The 4% rule is a common rule of thumb based on a starting withdrawal rate.

This calculator lets the rate change with your inputs.

FAQs

What is safe withdrawal rate?

Safe withdrawal rate is the estimated portfolio percentage that can be withdrawn annually without exhausting savings too early.

How do you calculate safe withdrawal rate?

Calculate a sustainable annual payment from portfolio value, real return, and retirement length, then divide by portfolio value.

What is a good safe withdrawal rate?

Many plans start around 3% to 4%, but the right rate depends on age, risk, inflation, and flexibility.

What is the difference between safe withdrawal rate and the 4% rule?

Safe withdrawal rate is customized. The 4% rule is a broad benchmark.