Retirement Income Calculator

About the Retirement Income Calculator

Estimates the annual (and monthly) income your retirement portfolio can sustainably generate based on a chosen withdrawal rate.

How to use this calculator

1. Enter your retirement portfolio value, such as a 401(k), IRA, or investment account balance.
2. Choose a withdrawal rate, which is the percent of the portfolio you plan to take out each year.
3. The calculator multiplies the portfolio by the withdrawal rate to estimate annual income.
4. Use the result to compare different withdrawal rates and see how your income changes.

The formula explained

The formula \(income = portfolio \times withdrawal\ rate\) computes the estimated annual income you can draw from your portfolio. It uses your total portfolio value and a yearly withdrawal rate written as a decimal.

• income = the estimated annual retirement income
• portfolio = the total value of the retirement savings or investment portfolio
• withdrawal rate = the fraction of the portfolio taken out each year, written as a decimal

Step by step method

1. Write down the portfolio value and convert the withdrawal rate to a decimal if needed.
2. Multiply \(portfolio\) by \(withdrawal\ rate\).
3. Interpret the product as the estimated amount you can withdraw each year.

Worked example

Problem. You have a retirement portfolio of \(\$800,000\) and plan to use a withdrawal rate of \(4\%\). How much annual income does that provide?

1. Convert \(4\%\) to \(0.04\).
2. Multiply \(800,000 \times 0.04 = 32,000\).
3. The estimated annual income is \(\$32,000\).

Tips and common mistakes

• Make sure the withdrawal rate is in decimal form before multiplying, so \(4\%\) becomes \(0.04\).
• This calculator estimates income, not guaranteed income, so actual results can change with market performance and inflation.

Frequently asked questions