Retirement Withdrawal Calculator

Retirement Withdrawal Calculator Instructions

This calculator calculates each year’s withdrawal amount and how much remained in an investment for an annual withdrawal rate that’s inflation adjusted. To use this calculator effectively, please provide the following information:

1. Symbol: Enter the fund (ETF or mutual fund) symbol (such as SPY for S&P 500 index ETF) desired. You can also enter a stock symbol (for example, a dividend paying stock such as VZ (Verizon Communication) or XOM (Exxon Mobile). Furthermore, you can even enter a MyPlanIQ portfolio symbol in the format of P_xxxxx where xxxxx is the portfolio ID. For example, P_46880 represents ‘Schwab Total Return Bond‘ portfolio (you can find its ID in its URL In essence, the calculator works for any stock, ETF, mutual fund or even a MyPlanIQ portfolio.

2. Annual Withdrawal Rate (Default 4%): Enter the annual withdrawal rate such as 0.04 (4%). The annual withdrawal rate is inflation adjusted. We use annual CPI data and the withdrawal rate is adjusted as wr*(1+CPI_annual_rate) for each year going forward. 

3. Initial Amount (Default $100,000): This is the starting amount you put in to the fund or the portfolio on start date.

4. Start Date (format: 01/01/2000. Leave empty for all available dates): You can enter a different (non empty) start date to test out how the withdrawal works from a start date other than the earliest date when the fund or portfolio has data.

After filling in all the parameters, click the “Submit” button to get a table that shows every year end’s Withdrawal Amount, (Cumulative) Total Withdrawal (so far) and Remaining Value in the account. The calculator also outputs a chart to show the remaining values through the years. You can move your cursor to a particular date to show the value.

Retirement withdrawal calculator: how much can I withdraw for a long lasting retirement?

Retirement planning can be daunting, especially when it comes to determining how much money you can withdraw from your investment portfolio each year without running out of funds. This is where the concept of safe retirement withdrawal rates comes into play. But what exactly is a safe withdrawal rate, and how can you ensure your retirement income will last for at least 30 years?

The Origins of the 4% Rule

A safe annual retirement withdrawal rate refers to the amount of money you can withdraw from your investment portfolio each year without depleting your funds too quickly. In general, a safe withdrawal rate is one that can guarantee income for at least 30 years. This assumption is based on the income being purely from an investment portfolio that includes stocks, bonds, and/or real estate.

The concept of a safe retirement withdrawal rate is not new. In fact, it dates back to the early 1990s when financial planner William P. Bengen introduced what has become known as the “4% rule.” This rule suggests that retirees can safely withdraw 4% of their investment portfolio each year without running out of money for at least 30 years.

The 4% rule is based on historical market data and assumes a portfolio mix of 50% stocks and 50% bonds. Bengen conducted extensive research on stock and bond returns over the past century and found that a 4% withdrawal rate would have provided sufficient income for a 30-year retirement period.

A more precise definition of the 4% withdrawal rule is that at the end of every calendar year, withdraw inflation-adjusted 4% for the next year spending. Inflation-adjusted 4% means for the first year, you start at 4%, and then the next year’s withdrawal rate would be adjusted by previous_year_withdrawal_rate*(1+inflation_last_12_month). Inflation is normally defined as using the Federal Reserve CPI for All Urban Consumers data. This approach may provide a consistent income stream, but it does not account for fluctuations in market returns.

Timing of retirement

Retiring at a bull market peak or a bear market low can dramatically affect the total withdrawal amount as well as the wealth (remaining value) of investments in a portfolio. A counter intuitive finding is that retiring at or near a bull market peak turns out to be the worst time to retire, both for the subsequent spending and the remaining investment value.

Withdrawal rate

Another obvious factor is the withdrawal rate. Using the data from 1990s to now, it has been found that withdrawing 4% or so (3-5% range), inflation-adjusted over a diversified stock and bond portfolio (such as 60% stocks, 40% bonds mix) has been able to sustain and maintain the purchase power (remaining value or investment value after withdrawal). However, we caution that the financial markets have in general experienced good growth since 1990s and the coming decades might present a very different secular picture.

Investment portfolio asset allocation

It’s generally accepted that a diversified asset allocation portfolio with stocks and bond mix in some broad base index funds could better withstand market volatility. We again caution here that the results for the past 30 plus years have been heavily influenced by an ultra favorable low interest environment that have favor risk assets such as stocks.

See the following articles for more information:

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