The formula
How to calculate withdrawal rate
Your withdrawal rate is what you take out each year as a percentage of what you hold. It is the single most important number in retirement, because it determines whether the portfolio outlives you or the reverse.
Note the distinction from a safe withdrawal rate. This measures your current behaviour; the safe rate is an estimate of what history suggests a portfolio can sustain. Comparing the two is the point.
What to enter:
- Annual withdrawals
- Portfolio value
No submit button: type and the answer moves. Your inputs end up in the link, so the page can be shared already filled in.
Worked example
Work through the defaults on this page:
- Annual withdrawals: 32,000
- Portfolio value: 750,000
That gives:
- Withdrawal rate: 4.27 %
- Monthly withdrawal: 2,666.67
- Years the pot lasts with no growth: 23.44 years
Reading the result
The no-growth figure is a useful floor. If withdrawals are 4.3% of the portfolio, it lasts 23 years even if markets return literally nothing — which frames how much of the plan depends on returns arriving.
Where this goes wrong. Recalculating 4% of the new balance every year. The rule tested in the research fixes the first year's amount and raises it with inflation thereafter. Taking a percentage of a fluctuating balance produces a very different, and far more volatile, income.
For a 30-year horizon, 4% held up in almost all historical periods. For 40–50 years, most analyses point to 3.25–3.5%. Flexibility helps more than precision: cutting withdrawals in bad years lifts the sustainable rate materially.
It can rise. A shorter remaining horizon supports a higher rate, which is why some plans start conservatively and increase withdrawals later, or link them to remaining life expectancy.
The headline figure is withdrawal rate. With 32,000 annual withdrawals and 750,000 portfolio value, that comes to 4.27 %. Change any field and the figure moves with it.