What can $300,000 pay each month from 70 for 25 years?

Because everything on this page is in today's money. A $500 contribution that rises with prices is the same effort in five years as it is now, which matches how most people actually save as their income keeps pace with inflation. If you plan to save a flat $500 in dollars instead, the real contribution shrinks slightly each year and the starting balance comes out a little lower than the breakdown shows. The difference over five years is modest.

This page cannot decide that for you, but it can price the choice. Waiting lets the balance compound, adds five years of saving and shortens the period the money must cover, so the monthly amount from 70 is meaningfully higher. The cost is five years of living on wages or other income, plus the risk that health or work changes the plan. Many people combine the two: delaying Social Security, which also pays more for each year of delay, while drawing modestly on savings in between.

It is before tax. The calculator works out how much the portfolio itself can pay, and it does not know which accounts the money sits in, where you live or what other income you have, all of which change the tax on a withdrawal. In the United States and Canada, money taken from tax-deferred retirement accounts is usually taxed as ordinary income, while other accounts follow different rules. Because no verified tax table sits behind this page, it leaves tax out rather than guessing. Plan to set aside part of each withdrawal for tax, or ask a tax professional how your mix of accounts is treated.

Because prices go up every year. A withdrawal that stays at the same dollar figure buys less and less as time passes, and over a retirement that can last thirty years or more the loss of purchasing power is large. The calculator therefore assumes you raise the amount you take by the inflation rate you entered, once a year, so that it keeps buying roughly the same things. The headline is shown in today's money for that reason. The breakdown shows the first withdrawal and the final year's withdrawal in the money of those years, which is why the later figure is larger.

The four percent rule answers a different question. Bengen in 1994 and the Trinity study in 1998 looked for the starting withdrawal that survived every thirty-year period in US market history, including the worst sequences of returns, so it is set to be safe in bad times. This calculator assumes a steady real return for exactly the horizon you choose. With a long horizon or a low return its figure can fall below the rule; with a short horizon or a high return it can rise above it. Both views are useful, and the comparison table shows them side by side.

This is the biggest risk the calculator does not model. When markets fall sharply in the first years of withdrawals, you are selling investments at low prices to pay for living costs, and those shares are not there to recover when the market does. The same fall later in retirement does much less damage. A constant-return model cannot show this sequence-of-returns risk. Ways people manage it include keeping a cash buffer for a year or two of spending, withdrawing less after a bad year, and using the lower rows of the sensitivity table as the planning figure rather than the central estimate.

Choose Preserve capital if you want the balance to keep its purchasing power indefinitely, for example to leave money to someone or to protect against a very long life. You will get a smaller monthly amount, because you only spend the real return and never touch the principal. The withdrawal period field stays active in this mode. It no longer changes the monthly figure, but it sets how many years the chart and the year-by-year table cover and which year the future-money row describes. If your return does not beat inflation, this mode shows zero and explains why.

No. The calculator only looks at the invested savings you enter, so Social Security, the Canada Pension Plan, Old Age Security and any workplace pension are all left out. For many retirees those payments cover a large share of their spending, which means the portfolio only has to fund the gap. A practical way to use the page is to work out your yearly spending, subtract the pension income you expect, and compare what is left with the monthly figure here. If a pension starts later than your withdrawals, the early years will need more from the portfolio than the later ones.

Enter a long-run return you would be comfortable defending, after the fees you actually pay, rather than a strong recent year. A mixed portfolio of stocks and bonds has historically earned less than an all-stock one, and cash earns less again. For inflation, the default of 2.5% sits a little above the 2% targets that the Federal Reserve and the Bank of Canada aim for, as a margin of caution. Try a lower return as well: the sensitivity table does this for you, and if the lower rows would leave you short it is wiser to plan around them.