Money tool
How big does the pot need to be?
Work back from the income you want. Then check the other direction: how many years what you already have would actually last, once inflation keeps raising what you spend.
- Last reviewed
- Method
- Compound growth, then a drawdown
- Your figures
- Stay in this browser
Before tax, and before any state or workplace pension you will also receive.
Lower than a growth portfolio: money being spent is usually held more cautiously.
Withdrawal rate
How much of the pot you take in the first year. There is no single right answer, so here are the ones the research actually supports.
The pot you need
$1,242,877
to draw $50,000 a year at 4%
$100k
Saved so far
$1.1m
Still to find
25x income
That is a multiple of
Dividing by a withdrawal rate is the same as multiplying the income by 25. That multiple is the number worth remembering — it turns any income into the pot behind it.
How long $100,000 would actually last
Drawing $50,000 a year, rising with inflation, it runs out in year 3. By then the withdrawal has grown to $1,855 a year, which is what 2.5% inflation does over that long.
| Year | Taken out | Left in the pot |
|---|---|---|
| 1 | $50,000 | $53,000 |
| 2 | $51,250 | $1,855 |
| 3 | $1,855 | $0 |
This runs an average return every year. Real markets do not: a bad run in the first few years of drawing money down does far more damage than the same run later, because withdrawals sell more units while prices are low. That is called sequence risk, and it is the reason the safe withdrawal rate is a range rather than a number.
A guide, not a quote. A single average return stands in for decades of real ones, which arrive in a different order every time. It ignores tax, charges, and any state or workplace pension you may also receive.
How this works
The pot a given income needs
pot = yearly income ÷ withdrawal rate
- A 4% rate means a pot 25 times the income you want from it
- 3.9% means about 25.6 times; 5% means 20 times
- Small changes to the rate move the target a great deal
Where the 4% rule actually comes from
The figure is from William Bengen’s 1994 study. He tested historical US market data and asked the narrow question: what is the highest starting withdrawal, raised each year with inflation, that would have survived the worst thirty-year stretch in the record? The answer was about 4%.
It was a finding about history, not a constant of nature, and the research has moved since. Morningstar’s 2026 State of Retirement Income puts the baseline nearer 3.9% for someone who wants fixed, predictable spending, and as high as 5.7% for someone genuinely willing to cut back in bad years. Bengen has since revised his own worst-case figure upward, to around 4.7%.
This is why the calculator offers a range rather than one number. The honest answer depends on how flexible your spending can be, and that is a fact about you rather than about markets.
A worked example
Suppose you want 40,000 a year from the pot. At 4% that is a target of 1,000,000. At 3.9% it is 1,025,641.
A tenth of a percentage point moved the target by more than 25,000. At 5% the same income needs only 800,000. The withdrawal rate is the most sensitive input on the page by a wide margin, which is a good reason to be conservative with it and a bad reason to go hunting for the highest one you can find justified.
What the drawdown projection does and does not model
Once you are spending the pot, the projection raises the withdrawal with inflation each year and keeps growing whatever is left. It shows the average path.
It deliberately does not model sequence-of-returns risk: the fact that a bad few years immediately after you stop working does far more damage than the same years later on, because you are selling into the fall. Two retirements with identical average returns can end very differently depending on the order those returns arrived. Treat the projection as the shape of the thing, not a promise about your particular thirty years.
Questions people ask
Does the 4% rule work outside the United States?
Less well than it is usually quoted. It was derived from US market history, which was unusually strong over the period studied. Research using broader international data generally supports a lower safe rate. If you are planning outside the US, treating 4% as an upper bound rather than a default is the more defensible reading.
Should state or employer pensions be included?
Only through the income figure. Work out the total you want to live on, subtract anything guaranteed from other sources, and bring the remainder here. The pot only has to cover the gap, which often makes the target far less daunting than the headline number suggests.
What if I retire early?
A longer retirement needs a lower withdrawal rate, because the money has to survive more years and more bad stretches. The 4% finding was tested over thirty years. For a forty- or fifty-year horizon, the comparable safe figure is meaningfully lower, and flexibility in spending becomes more valuable than any particular starting percentage.
Why does the projection ignore sequence of returns?
Because modelling it properly needs either historical sequences or a simulation across thousands of paths, and either would produce a range of outcomes rather than a single line. Showing one line is clearer, as long as it is labelled for what it is: the average path, not the worst case. The flexible withdrawal range is the page’s nod to that risk.
Method and figures last reviewed . Every worked example here is produced by the same calculation the page runs — enter the same inputs above and the numbers will match.