Retirement drawdown calculator - how much can you take out each year?

It's the question that decides everything else in retirement, and there's no single right answer - only strategies with different trade-offs.

Take a fixed amount each year and your spending is predictable, but you're ignoring what the market is doing. Take a percentage of what's left and you can't technically run out, but your income swings around and you may spend years living on far less than you need. Most of the sensible strategies sit somewhere between those two poles.

Too many people sleepwalk through spending their savings. The money doesn't last as long as it could, or - just as common, and less talked about - they die with far more than they needed and never had the retirement they'd paid for.

This calculator runs eight of the best-known drawdown strategies on your numbers, so you can see what each one would actually mean for your spending and your balance.

Retirement drawdown calculator

It runs 1,000 scenarios, not one

Most retirement calculators give you a single number built on an average return. No-one's retirement is average. Averages hide the thing that actually decides whether your money lasts: the order the good and bad years arrive in.

This one runs 1,000 randomised scenarios and gives you a range. Which means you get your odds, not a forecast.

One consequence worth knowing before it surprises you: run it twice and the numbers move. That's not a bug. It's what randomness looks like. The median stays fairly stable between runs. That's the number to anchor on.

The eight strategies

Each of these is covered properly in the article, with a worked example and the pros and cons of each. Here's the short version.

Dollar plus inflation (the 4% rule) - take a set percentage in year one, then increase it by inflation every year after. Simple and predictable. Completely ignores what your investments are doing.

Percentage of investment balance - take the same percentage of whatever you've got each year. Can't run out, but your spending moves with the market and can move a long way.

No spend inflation in down years - the 4% rule, except you skip the inflation increase after a negative year. Slightly better odds than the 4% rule, almost as predictable.

Guardrails (Guyton-Klinger) - a percentage of your balance, with upper and lower limits so you only adjust when the withdrawal rate drifts more than 20% from where it started. Middle of the pack on nearly everything.

Vanguard dynamic spending - an attempt at the best of both, with a ceiling and floor on how much your spending can move each year. In trying to split the difference it can end up middling.

Bogleheads variable withdrawal - a withdrawal percentage that ratchets up as you age, from a table based on your age and asset allocation. Close to a die-with-zero approach. Highest spending, and the most likely to leave you short if you live longer than planned.

Yale endowment - 70% of last year's spending plus inflation, 30% based on your current balance, with guardrails. Reacts to markets without being ruled by them.

Shiller CAPE - sets your withdrawal rate from the market's cyclically adjusted P/E ratio. Low spending when shares are expensive, higher when they're cheap.

→ The eight strategies explained in full, with worked examples

What each one tends to do

I ran ten random simulations of each strategy. Ten isn't exhaustive and these aren't predictions, but the patterns were consistent enough to be worth knowing before you start.

Strategy	Annual spend	Year-to-year variation	Balance at the end
Dollar plus inflation	High	None	Low
% of balance	Low	Very high	Often the highest
No spend inflation	High	Very low	Low
Guardrails	Middle	Low	Middle
Vanguard dynamic	Middle	High	Varies with your starting rate
Bogleheads	Highest	Highest	Lowest — most likely to run short
Yale endowment	Low	Moderate	Higher
Shiller CAPE	Depends on valuations	Low, and slow-moving	—

The trade-off runs across the table rather than down it. Strategies that let you spend more leave less behind; strategies that leave more behind ask you to accept a bumpier ride, or a thinner one. There is no best strategy. Only the one whose downside you can live with.

Two things that trip people up:

"You can't run out" isn't the reassurance it sounds like. Any strategy based on a percentage of your balance is technically incapable of hitting zero. A percentage of a small number is still a positive number. But 4% of $80,000 won't fund a retirement. Watch for years of spending well below what you need, not just for the balance hitting zero.

Shiller CAPE can't be simulated forward, and I haven't pretended otherwise. The CAPE ratio is only knowable today, so the calculator assumes today's ratio holds for the rest of your retirement, which won't happen. You can enter a CAPE ratio year by year in column G if you want to model it properly. Treat that strategy's output as illustrative rather than comparable to the other seven.

What the calculator doesn't do

It doesn't calculate tax. You enter your expected return after tax. That's a deliberate choice. Your return is a guess to begin with, and modelling tax on top of a guess adds a lot of complexity without adding much accuracy. It also keeps an already complicated spreadsheet usable.

It doesn't have a field for NZ Super or other income. You handle it through your withdrawal rate instead, by entering what you need from the portfolio rather than what you need in total. If you've got $500,000 saved, want to spend $50,000 a year, and expect $20,000 of income, your withdrawal rate is 6% — ($50,000 − $20,000) ÷ $500,000.

That second one matters. Enter your full spending without netting off your other income and the calculator will model a withdrawal rate far higher than the one you'll actually need, and everything downstream of it will be wrong.

It doesn't model income and spending that change over time. There's room for two lump-sum income events and four one-off spending events, and you can change your return assumption up to four times as you age, but your regular income and spending stay put. Real retirements aren't like that. Super starts at 65, part-time work winds down, spending usually eases off through your eighties.

That's a deliberate limit. This calculator's job is to compare eight strategies on one consistent set of numbers, and letting everything move at once would make the comparison meaningless. Once you've settled on a strategy, the retirement planning spreadsheet is where you model the messier version. Income and spending that change as your retirement does.

The two work best in that order: pick a direction here, then plan it there.

Retirement drawdown calculator

How to use it

Enter your details in the purple cells on the enter details here sheet. You can enter up to four different investment return assumptions, in case you want to get more conservative as you age. There's also room for two lump-sum income events and four one-off spending events that sit outside your normal pattern.

Results appear on the next worksheet. For year-by-year detail - returns, withdrawals and balances - click the tab for the strategy you're interested in along the bottom.

On the spending graph, I've used today's dollars. If $25,000 of spending in 25 years' time works out to $50,000 after inflation, the graph still shows $25,000. That's deliberate: it lets you see whether your standard of living is holding up or quietly eroding. A graph showing $40,000 in year 25 tells you nothing, because you've no idea whether that's more or less than you're living on now. Note that the graph uses today's dollars but the detailed tables use inflated dollars.

Four of the strategies need a few extra inputs on their own sheets:

Guardrails — cell C7 is how far your withdrawal rate can drift from its starting point before you act. Cell C8 is the largest increase or decrease in spending you'll allow when it does.

Vanguard dynamic — cell C7 is the most you'd increase spending after a good year; cell C8 the most you'd cut it after a bad one.

Yale endowment — C7 and C8 as above, plus C9: yes or no as to whether you want to use a three-year average balance rather than the current one.

Shiller CAPE — column G, if you want to enter the ratio year by year. There's a link on that sheet to the current S&P 500 figure.

Two practical notes. The spreadsheet holds a lot of data, so the graphs can take a moment to catch up after a change. And it recalculates automatically, which means results shift when you didn't ask them to. If that bothers you, save the file and switch to Formulas → Calculation Options → Manual, then click Calculate Now when you want an update. Sometimes it's useful to watch the variation, so I've left it on automatic by default.

This isn't a set-and-forget exercise

The results will change from year to year, sometimes a lot. Your spending will be more or less than you assumed. Returns will be nothing like the number you entered. That's not a failure of the plan, it's the normal condition.

Review it at least annually. The most useful way to do that: save this year's file, and next year start fresh on the summary page with your actual numbers. Comparing the two tells you more than either does on its own.

Most people don't follow any of these rules to the letter, and that's fine. Unexpected costs happen, unexpected income happens, and hardly anyone does the annual check-in religiously. Some flexibility beats none. Pick a direction, and adjust as you go.

Want a second opinion on your drawdown plan?

Getting the saving-up part wrong is recoverable. Time and regular contributions fix a lot. Getting the drawing-down part wrong is much harder to come back from, and you find out late.

If you'd like to talk it through with an independent adviser with nothing to sell, get in touch for a free 30 minute chat.