1. What is the Drawdown Calculator?

The Drawdown Calculator estimates how long retirement savings last with systematic withdrawals. It calculates the remaining balance after a specified number of years based on initial savings, expected return rate, and annual withdrawal amount.

2. How Does the Calculator Work?

The calculator uses the drawdown formula:

Where:

• \( \text{Initial Balance} \) — Starting retirement savings amount
• \( \text{Return Rate} \) — Expected annual investment return rate
• \( \text{Annual Withdrawal} \) — Amount withdrawn each year
• \( n \) — Number of years

Explanation: The formula accounts for both portfolio growth and systematic withdrawals over time.

3. Importance of Retirement Drawdown Planning

Details: Proper drawdown planning helps ensure retirement savings last throughout retirement, prevents premature depletion of funds, and allows for informed withdrawal strategy decisions.

4. Using the Calculator

Tips: Enter initial balance in dollars, return rate as a percentage, annual withdrawal amount in dollars, and number of years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What is a safe withdrawal rate?
A: The traditional 4% rule suggests withdrawing 4% of initial portfolio value annually, adjusted for inflation, but individual circumstances may vary.

Q2: How does return rate affect drawdown?
A: Higher returns allow for larger withdrawals or longer sustainability, while lower returns require more conservative withdrawal strategies.

Q3: What if my return rate is zero?
A: With 0% return, the formula simplifies to: Balance = Initial Balance - (Annual Withdrawal × Years)

Q4: Should I adjust for inflation?
A: For accurate long-term planning, consider using real (inflation-adjusted) returns rather than nominal returns.

Q5: What are the limitations of this calculator?
A: This assumes constant returns and withdrawals, which may not reflect real-world market volatility and changing spending patterns.