Retirement Spend-Down Calculator: $42,000/yr from a $900,000 Portfolio (4.67%)
Use this guide to understand the assumptions, inputs, results, and next steps behind the calculator.
Created by Luis Gonzalez · Last updated May 18, 2026
A retirement spend-down projection estimates how portfolio withdrawals, investment returns, and rising expenses may change savings over time. This calculator compares a starting portfolio and spending need with guaranteed income, a target depletion age, inflation, and a legacy goal. It can help you see whether the planned withdrawal burden appears compatible with your timeline, but it cannot guarantee that a portfolio will last.
The default inputs are a $900,000 portfolio, $72,000 annual spending need, $30,000 guaranteed income, and age 65 to 95. The initial amount spending must be funded from savings is $42,000 per year: $72,000 − $30,000 = $42,000. That equals 4.67% of the starting portfolio: $42,000 ÷ $900,000 × 100 = 4.67%. These are input-based arithmetic checks, not projected result-card values.
For a broader view of income and withdrawals, compare with the retirement withdrawal calculator and retirement income calculator.
Enter the portfolio, spending, and timeline
Set the starting portfolio to the assets you plan to use for retirement expenses. Enter annual spending need and guaranteed income on the same basis: if spending is before tax, do not compare it with after-tax income without accounting for the difference.
Current age and target depletion age define the intended planning horizon. Annual return and inflation influence the projection, while spending growth estimates how quickly expenses rise. The legacy goal represents money you hope to retain at the end; it is a planning preference, not a guaranteed bequest.
A one-time expense and the age it occurs can help test a large future cost, such as a home renovation or medical expense. The default one-time expense is $0, so it has no effect unless you enter an amount. For a separate care-cost scenario, see the long-term care Medicaid spend-down calculator.
Default case: what must the portfolio cover?
The default portfolio is $900,000 and annual spending need is $72,000. Guaranteed income of $30,000 reduces the first-year amount required from investments:
First-year portfolio need = annual spending need - annual guaranteed income
First-year portfolio need = $72,000 - $30,000 = $42,000
The simple first-year withdrawal rate is:
First-year withdrawal rate = portfolio need ÷ starting portfolio
First-year withdrawal rate = $42,000 ÷ $900,000 = 0.0467 = 4.67%
This is not a full depletion forecast. It does not incorporate the calculator’s unknown timing conventions for applying returns, inflation, spending growth, or the legacy goal. The compute function was not available in the supplied specifications, so precise default outputs such as projected depletion age and ending balance cannot be verified here.
How to interpret the scenario
The first-year withdrawal rate is a useful stress signal, not a pass-or-fail threshold. A plan with a higher initial rate may still work under favorable returns and flexible spending, while a lower rate can fail if costs rise or markets perform poorly early in retirement. A fixed average return also hides the order of returns: losses early in withdrawals can force a portfolio to sell more assets when balances are down.
Inflation and spending growth are separate inputs. If both are set to 2.5%, the model is effectively testing expenses that rise at the same assumed rate as general inflation. Actual retirement costs do not all move together: healthcare, housing, travel, and taxes can follow different paths. The Bureau of Labor Statistics explains how the Consumer Price Index measures price changes across household spending categories at BLS.gov.
Test a lower return, higher inflation, and an expense shock rather than relying on one baseline. Compare the results with a retirement spending calculator and the 4% rule withdrawal calculator. The 4% rule is not a government guarantee or a universal safe rate; it is a historical rule of thumb that depends on assumptions and portfolio design.
Compare different starting conditions
The table uses separate illustrative scenarios. Only the first-year gap and withdrawal rate are calculated from the listed inputs; no later depletion age is asserted because the projection logic was not supplied.
| Scenario | Portfolio | Spending need | Guaranteed income | First-year portfolio need | Initial rate |
|---|---|---|---|---|---|
| Lower spending case | $1,100,000 | $65,000 | $32,000 | $33,000 | 3.00% |
| Default case | $900,000 | $72,000 | $30,000 | $42,000 | 4.67% |
| Higher spending, less income | $750,000 | $80,000 | $24,000 | $56,000 | 7.47% |
Higher guaranteed income lowers the amount that must come from investments. A larger portfolio can also lower the initial withdrawal rate. Neither change removes market risk, taxes, or unexpected costs. If you have pension income, review a pension income estimate or compare an income contract with a retirement annuity calculator.
Formula framework and limitations
The core cash-flow relationship is straightforward, though exact yearly results depend on when the calculator applies withdrawals and returns.
Portfolio-funded spending = annual spending need - guaranteed income
Initial withdrawal rate = portfolio-funded spending ÷ starting portfolio
A simplified annual balance model might be represented as:
Ending balance = opening balance + investment growth - portfolio withdrawal - one-time expenses
If expenses increase each year, the spending amount can be adjusted using:
Spending in year n = first-year spending × (1 + spending growth rate) ^ n
These formulas explain the main relationships; they are not a substitute for the calculator’s exact compute sequence, which was not available. The result may also differ from your actual after-tax cash flow. Taxable distributions from traditional retirement accounts are often taxed as ordinary income, and account type affects the amount available to spend. See how 401(k) withdrawals are taxed in retirement and the IRS explanation of retirement distributions at IRS.gov.
Adjust the plan when the projection looks tight
If the projection shows savings ending before the target age, test changes that match decisions you can make: reduce discretionary spending, work longer, increase guaranteed income, or set a lower legacy target. Do not treat a lower legacy goal as free money if you need that amount for later-life care or family support.
If you want to preserve a bequest, a higher legacy goal means more money must remain at the end of the modeled period. Compare it with a retirement goal calculator and a retirement number calculator. If you plan to adjust withdrawals across account types, explore a tax-efficient retirement withdrawal calculator and read the best order to withdraw from retirement accounts.
Frequently asked questions
What does “depletion age” mean?
It is the age at which the model estimates the portfolio balance reaches zero, based on its assumptions and calculation sequence. It is not a prediction of the age you will run out of money.
Does the calculator count Social Security as guaranteed income?
Enter Social Security and other reliable recurring payments in the guaranteed-income field if that matches the calculator’s input instructions. Confirm that your benefit estimate reflects your expected claiming age; the Social Security Administration offers personalized estimates.
Should I target a zero balance at age 95?
Not necessarily. A zero balance leaves no portfolio reserve for living longer, large expenses, or a bequest. Choose a target based on your risk tolerance and other resources, then test a longer life expectancy and a positive legacy amount.
Should I lower spending or accept a smaller legacy?
That is a tradeoff between current lifestyle and future assets. First separate essential costs from discretionary costs. Reducing flexible spending may protect the portfolio without cutting necessities, while lowering a legacy target may increase current spending capacity but leave less for heirs.
Does a 4.67% first-year withdrawal rate mean my plan is unsafe?
No single rate determines the outcome. The default rate is a simple calculation from the first-year spending gap and starting portfolio; it does not include the full return path, taxes, or withdrawal timing. Test multiple scenarios rather than treating a threshold as a guarantee.
How should I account for taxes?
Enter spending and income on a consistent basis, then assess account withdrawals and taxes separately. Traditional retirement account withdrawals are generally taxable, but actual tax depends on income, filing status, account type, and state. Learn about tax-efficient withdrawals.
Next step
Run a baseline, then stress-test lower investment returns, higher inflation, and a one-time expense. Compare the cash-flow result with an income plan and a withdrawal strategy before relying on any single projected depletion age.