Interactive Tool
Will your money last?
Retirement's second problem is living off the pile. Your spending sets the nest egg you need — about 25× at a 4% withdrawal rate — and any guaranteed income shrinks it. But an average hides the real danger: sequence risk, the bad luck of poor early returns. Run your plan through real market history and watch the whole spread of outcomes, not just the tidy average.
Monthly costs in retirement
Guaranteed income
Your plan
Does your income cover it?
$1,000,000 at 4% sustainably provides $3,333/mo, about 69% of your $4,850/mo burn rate.
Short by $1,517/mo. You'd need roughly $455,000 more saved.
But an average return hides the risk. Try the Historical stress test to see the real spread.
A rough planning sketch: costs are steady in today's dollars and the withdrawal rate is a historical rule of thumb, not a guarantee. Guaranteed income is assumed to rise with inflation.
From spending to survival
- Spending sets the target. Flip the 4% rule around: annual spending ÷ withdrawal rate is the nest egg you need (about 25× at 4%). It's the fastest way to turn a lifestyle into a number.
- Guaranteed income shrinks it. A pension or Social Security check is subtracted from spending first, so only the remaining gap has to come from the portfolio. Because of the 25× multiplier, even a modest guaranteed income slashes the nest egg you need.
- Sequence risk is the real test. Two retirees with the same average return can end up worlds apart if one meets a crash early. The historical stress test runs your plan through hundreds of real market paths so you see the odds it lasts, not just a single hopeful line.
- Fixed or flexible? Switch the withdrawal strategy to compare two philosophies. Fixed (Bengen) spends the same amount every year and leaves you exposed to running out. Guardrails (Guyton-Klinger) flex spending — trimming after bad markets, raising after good ones — so the money almost never runs dry, but your income varies. The tool estimates your average withdrawal rate and shows how much your spending would swing.
- Where does sequence risk come from? The "Same returns, shuffled" experiment isolates it: one real stretch of market history, replayed in every order. Same years, same average — yet worst-years-first goes broke while best-years-first ends rich. Turn withdrawals off and every ordering lands on exactly the same number, because multiplication doesn't care about order. Sequence risk isn't in the market; it's created the moment money moves out of (or into) the portfolio.
This is the drawdown half of retirement. The account decisions that get you here — when to claim Social Security, and Roth vs. Traditional — now live in the Retirement Accounts tool. Educational only, not financial advice.
Sources & further reading
How this tool was made
A live simulator driven by the spending, portfolio, and horizon you set. The stress test resamples real annual US stock, bond, and inflation returns (Damodaran, 1928–present) in five-year blocks to build 1,500 alternate retirements; “Same returns, shuffled” replays one real historical window in different orders.
Research
- Bengen, W. P. (1994). “Determining Withdrawal Rates Using Historical Data.” Journal of Financial Planning 7(4): 171–180. Origin of the “4% rule.”
- Cooley, P. L., Hubbard, C. M., & Walz, D. T. (1998). “Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable.” AAII Journal 20(2): 16–21. The “Trinity study.”
- Guyton, J. T., & Klinger, W. J. (2006). “Decision Rules and Maximum Initial Withdrawal Rates.” Journal of Financial Planning 19(3): 48–58. The guardrails approach: flexing spending with decision rules (capital-preservation and prosperity rules) lets you start at a higher withdrawal rate without running out.
Data
- Historical Returns on Stocks, Bonds, Bills & Real Estate — United States, Aswath Damodaran, NYU Stern School of Business. Annual series from 1928 (histretSP.xls), published by the author without stated usage terms; used with attribution.
Educational use only, not financial advice. Every figure traces back to the sources above or to the inputs you set — the full method and the source code are public.