Turning Retirement Savings Into Income
A retirement balance only becomes useful when it can support spending. This calculator compounds current savings and planned contributions until retirement, then converts the projected balance into monthly withdrawals over the years between your retirement age and life expectancy.
The level-income result keeps the monthly payment constant. The inflation-adjusted result starts lower but increases each year at the assumed inflation rate, which is designed to preserve purchasing power more effectively. Neither result is guaranteed: actual market returns vary, and withdrawals during a market decline can permanently reduce the portfolio’s recovery potential.
Treat the output as a planning range. Test lower returns, longer life expectancy, and higher inflation. Also account separately for taxes, healthcare, fees, Social Security, pensions, and any income from property or part-time work.
How to Calculate Retirement Withdrawals
Step One: Grow the current balance
Compound current savings until the planned retirement age.
future value of current savings = currentSavings × (1 + annual return)^(retirementAge - currentAge)
$30,000 × 1.06^32 = $194,154
Step Two: Add future contributions
Calculate the future value of monthly and annual contributions, then add both to the grown starting balance.
future value of monthly deposits = monthlyContribution × (((1 + monthly return)^months - 1) / monthly return)
$500 × ((1.005^384 - 1) / 0.005) = $588,983
Step Three: Calculate a level monthly payment
Use the ordinary annuity payment formula over the expected retirement months.
level payment = retirement balance × monthly return / (1 - (1 + monthly return)^(-retirement months))
$783,137 × 0.005 / (1 - 1.005^-216) = $5,594.20 per month
Step Four: Calculate an inflation-adjusted payment
Use the growing-annuity formula when withdrawals are intended to rise with inflation.
first payment = retirement balance × (monthly return - monthly inflation) / (1 - ((1 + monthly inflation) / (1 + monthly return))^retirement months)
$783,137 × (0.005 - 0.0025) / (1 - (1.0025 / 1.005)^216) = $3,504.07 per month