1. What is the Retirement Calculator?

Definition: This calculator estimates how long your retirement savings will last based on your annual withdrawals, principal amount, and investment return rate.

Purpose: It helps individuals plan their retirement by determining the sustainability of their withdrawal strategy.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( \text{Years} \) — Time until depletion (years)
• \( W \) — Annual withdrawal (USD)
• \( P \) — Principal amount (USD)
• \( r \) — Annual return rate (decimal)

Explanation: The formula calculates how many years your money will last given a constant annual withdrawal and investment return rate.

3. Importance of Retirement Planning

Details: Proper retirement planning ensures you don't outlive your savings and helps you adjust withdrawal rates or investment strategies as needed.

4. Using the Calculator

Tips: Enter your annual withdrawal amount, total principal/savings, and expected annual return rate (default 0.05 for 5%). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What happens if my withdrawal is less than investment returns?
A: If W ≤ P × r, your money will last forever (result shows ∞) as you're only spending the investment returns.

Q2: What's a typical safe withdrawal rate?
A: The 4% rule is common, but this depends on your risk tolerance and market conditions.

Q3: Does this account for inflation?
A: No, this is a simple calculator. For inflation-adjusted calculations, use a more advanced retirement tool.

Q4: How do taxes affect this calculation?
A: Taxes reduce your effective return rate. Consider using after-tax return rates in your calculation.

Q5: What if my returns vary each year?
A: This calculator assumes constant returns. For variable returns, consider Monte Carlo simulations.