Retirement Withdrawal Calculator: A Step‑by‑Step Guide

Introduction

Planing how to withdraw money from your retirement portfolio is critical to making your savings last. Our Retirement Withdrawal Calculator models different withdrawal approaches using historical market data, historical inflation and customizable assumptions. This tutorial will show you how to use the calculator, interpret the results, and experiment with scenarios.

💡 Before We Start – Try It Yourself – Retirement Withdrawal Strategy Calculator

1. Getting Started – defining your simulation

After opening the calculator, click Start your calculation to reveal the inputs sidebar and results area. The simulation begins with three core settings:

• Starting portfolio – the value of your retirement portfolio at the beginning of the simulation. Enter any number (e.g., 750 000) to reflect your personal savings.
• Start year – use the slider to set the first year of your retirement. Historical data runs from 1928 through 2024, so pick any year in that range.
• Simulation years – choose how many years you want the simulation to run. For example, set 30 years for a typical retirement or extend it to 50 years to test extreme longevity.

As you adjust the start year or the number of years, the slider updates and the calculator recalculates automatically. The results update live, so you can immediately see how changes affect your outcomes.

2. Choosing an inflation assumption

Inflation reduces the purchasing power of your withdrawals. The calculator offers two ways to model it:

• Historical CPI – uses the actual Consumer Price Index for each year (available through 2024). Selecting this option hides the fixed inflation field.
• Fixed rate – lets you specify a constant annual inflation rate. When this option is selected, the Fixed Inflation (% p.a.) slider appears, and you can set a value between 0 % and 10 %.

Use historical CPI to see how real-world inflation would have impacted your withdrawals, or set a fixed rate (for example, 2.5 %) if you want a constant assumption.

3. Selecting a withdrawal strategy

Choose from several withdrawal strategies using the Strategy drop‑down menu. When you change the strategy, the calculator updates the description and shows the relevant input fields. Each strategy has its own logic:

4. Entering strategy parameters

Once you select a strategy, a set of inputs appears underneath. For example:

• Initial Withdrawal Rate (%) for the 4 % rule allows you to adjust the starting percentage. The default is 4 %.
• Withdrawal % p.a. for the Fixed Percent strategy lets you set a constant percentage.
• Yearly Amount (real) for the Fixed Real strategy specifies the inflation‑adjusted dollar amount.
• Guardrail parameters like the initial withdrawal rate, guardrail band, raise/cut percentages, minimum and maximum rates and a “skip raise after loss year” toggle for the Guyton‑Klinger method.

Change these values to match your spending goals or run multiple simulations to compare different settings.

5. Additional adjustments and cash flows

The Additional Adjustments section lets you model other factors:

• Fees & Tax Drag (% p.a.) – reduce returns by a constant percentage to account for investment costs or taxes. Adjusting this slider updates the display and the simulation.
• Annual Contributions – add or subtract a fixed amount each year. Useful if you plan to continue working part‑time or to simulate required minimum distributions.
• One‑off Cash Flows – click Add Cash Flow to insert one‑time income or expenses. Specify the year, amount and whether it’s income (positive) or an expense (negative). You can add multiple rows or remove them at any time.

6. Running and interpreting the simulation

The calculator runs automatically whenever you change an input. The Key Performance Indicators (KPIs) summarize the results:

• Longevity – whether the portfolio lasts for the entire simulation. If it depletes early, the KPIs show how many years it lasted.
• End Portfolio – final portfolio balance (nominal or inflation‑adjusted depending on the Real toggle).
• Total Withdrawals and Average Withdrawal – cumulative withdrawals and the average per year.
• Max Drawdown – the largest peak‑to‑trough decline and when it occurred.
• Worst Year – year with the lowest return and a note about the historical event(s) around it.

When applicable, a Sustainable Withdrawal Rate/Amount card appears, showing the withdrawal level that would exactly deplete the portfolio over the period.

Use the toggle bar above the chart to:

• Hide the inputs panel for a clean view.
• Show advanced metrics like withdrawal rate statistics, sequence risk and safe‑zone years.
• Switch between nominal and real values.
• Show or hide cash flows, rolling average, historical events and fees drag.

7. Using advanced options and toggles

Turn on Advanced metrics to reveal extra cards detailing:

• Withdrawal rates (min/median/max) – distribution of withdrawal rates across the years.
• Sequence risk – measures how sensitive your plan is to early poor returns.
• Peak burn rate – highest burn rate relative to a baseline.
• Recovery time – number of years it takes for the portfolio to recover from the worst drawdown.
• Safe zone years – how many years end with at least 80 % of the peak portfolio value.
• Inflation impact – difference between nominal and real totals.
• Total fees/tax drag – cumulative cost of the fees percentage.

Below the chart you’ll find a legend of Historical Events and a Milestones table summarizing key dates (start, max drawdown, end). Click the small arrow to expand or collapse the milestones list.

8. Forecasting beyond historical data

Historical data ends in 2024, so if your simulation goes beyond that year, the calculator uses your Forecast Assumptions:

• Expected Return Rate (%) – expected annual real return after 2024.
• Forecast Inflation (%) – expected inflation rate when using historical CPI; not shown when using fixed inflation.

These inputs only appear when the end year exceeds the last historical year. They let you explore how different future market conditions could affect your retirement.

9. Exporting your results

Use the Export button (top right of the chart area) to save your work:

• PNG Image – captures a screenshot of the results and chart.
• PDF Report – generates a formatted report with charts and tables that you can download or print.

When you export, the calculator temporarily hides interactive controls and then restores them after the file is generated.

10. Hands‑on example

Let’s walk through a practical scenario using real data:

Scenario: Suppose you retired in 1975 with €750 000 invested and you plan to withdraw for 50 years. You choose the 4 % rule with an initial withdrawal rate of 4 % and assume historical CPI inflation. Fees and tax drag are set to zero.

To model this:

1. Enter 750 000 in the Starting portfolio field.
2. Move the Start year slider to 1975.
3. Set Simulation years to 50.
4. Under Withdrawal Strategy, choose 4 % rule and leave the initial rate at 4.0 %.
5. Leave fees, contributions and one‑off cash flows at zero.

When the simulation runs, the KPIs reveal that the portfolio survives the full 50‑year horizon. Despite several crises—like the 2008 financial crisis—the final nominal balance grows to about €17.9 million, and the retiree withdraws a cumulative €4.68 million (around €93 700 per year on average). The maximum drawdown occurs in 2008, when the portfolio temporarily falls by roughly 48.8 %, but the subsequent recovery leads to substantial growth. The milestones table highlights these moments. This example illustrates how long‑term discipline and market rebounds can support sustained withdrawals even after severe downturns.

11. Tips and additional ideas

• Stress‑test multiple scenarios: Vary the start year, strategy and parameters to see how sensitive your plan is to market conditions and inflation.
• Include realistic fees: Even small annual costs can significantly reduce your end balance over decades. Experiment with different drag percentages.
• Model future contributions or expenses: Use the annual contribution and one‑off cash flow features to represent part‑time work, pensions, or large planned purchases.
• Toggle between nominal and real: Viewing results in real terms helps you understand the true purchasing power of your withdrawals.
• Combine strategies: Run simulations with several strategies to see which better meets your risk tolerance and lifestyle needs.
• Share and export: Use the export options to discuss results with family or a financial adviser, or to simply come back and have a personal starting point for planning.

Keep on planning! Yours Marc