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.
The order the fields are filled in makes no difference to the result — the calculator recomputes the whole formula from whatever is currently in every field, not step by step. That means it is safe to adjust one number, watch the result change, and adjust it back, without worrying about resetting anything first.
Why withdrawal rate matters
FIRE stands for Financial Independence, Retire Early — reaching a portfolio large enough that investment income covers your living costs, so paid work becomes a choice rather than a necessity. It is not a specific account or product, just the point at which the figures below cross over.
Most people who look up a withdrawal rate calculation already have a specific number in mind — a quote, an offer, a target — and want to check it rather than learn the theory behind it. This page is built for that: enter your own figures, see the result immediately, and change any field to see how the answer moves without redoing the arithmetic from scratch each time.
Beyond a one-off check, the same calculation is worth revisiting whenever the underlying numbers change — a new interest rate, a change in income, a different term. Because the figures live in the page's own web address, coming back to update just one field and compare the new result against the old one takes seconds rather than starting again from a blank page.
The reason a page like this exists at all, rather than leaving the calculation to a spreadsheet or a textbook appendix, is that the formula behind withdrawal rate is fiddly enough to get wrong by hand but not complicated enough to need specialist software. That middle ground — real enough maths to matter, simple enough to check instantly — is exactly what a dedicated calculator is for, and it is why the same figure recalculated here should match a careful manual calculation almost exactly.
In practice, most people arrive at a page like this one having already tried a version of the calculation by hand or in a spreadsheet, and use the calculator here to confirm it rather than replace it. That is a reasonable way to use it — the two should agree to the last decimal place if the same inputs and the same formula are used, and if they do not, the formula shown above is the one to check your own working against first.
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
These figures are only the calculator's own starting values, included so the working is visible rather than hidden inside the tool above. Replace them with your own numbers and the same arithmetic applies — nothing about the method changes, only the inputs feeding it.
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.
A useful check on any unfamiliar result is to compare it against a rough mental estimate first — round the inputs to convenient numbers and see whether the calculator's answer lands in roughly the same territory. A wildly different figure usually means one of the fields was entered in the wrong unit, most often a percentage typed as a whole number where a decimal was expected, or the reverse.
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.
Whenever one of the underlying figures changes — a new interest rate, a different balance, an updated term — since the result only reflects what is currently in the fields. There is no need to keep a separate record of past results; the web address for a filled-in version already carries the figures used to produce it.
Not unless a tax rate or a fee is explicitly one of the inputs above. Where it is not, the figure shown is a gross calculation, and any tax due depends on your personal circumstances and current tax rules, which are worth checking separately.
The arithmetic itself is exact — the calculator applies the formula shown above precisely, with no rounding until the final figure is displayed. The uncertainty, where it exists, is entirely in the inputs: an estimated rate or an approximate balance carries that same approximation through to the result.