How much a balance can pay out each month
Retirement turns the saving question around: not "what will this grow to" but "what can I take out, and for how long". This calculator gives the level monthly withdrawal that runs a balance down to zero over a set number of years while it keeps earning interest.
The formula
Worked example: $200,000 at 4% over 15 years
- Monthly withdrawal: $1,479.38
- Withdrawn over 15 years: $266,288
- Of which interest earned along the way: $66,288
The balance pays out a third more than it started with, because the money not yet withdrawn keeps earning. That is also why the first withdrawals barely dent the principal and the last ones drain it.
Years and rate
| Balance | Rate | Years | Monthly | Total withdrawn |
|---|---|---|---|---|
| $200,000 | 4% | 15 | $1,479 | $266,288 |
| $200,000 | 4% | 20 | $1,212 | $290,871 |
| $200,000 | 4% | 25 | $1,056 | $316,702 |
| $200,000 | 5% | 15 | $1,582 | $284,686 |
Stretching from 15 to 25 years costs $423 a month but delivers $50,000 more in total. One point of return is worth $102 a month over 15 years. The rate matters, but the horizon is the decision that changes the monthly figure most — and the one that carries the risk of guessing your own lifespan.
Drawing down against living off the interest
Taking only the interest on $200,000 at 4% gives $667 a month and leaves the capital intact forever. Drawing down to zero over 15 years gives $1,479 — more than double — and leaves nothing. The 4% rule sits between the two: withdraw 4% of the starting balance, rising with inflation, and a diversified portfolio has historically lasted 30 years.
Which is right depends on what the money is for. A bridge to a pension starting in 15 years is exactly a drawdown; a fund that must outlive you is not.
Inflation eats the level payment
$1,479 in year 15 buys what about $1,020 buys today at 2.5% inflation. A level withdrawal is a falling real income. To hold purchasing power the first year's withdrawal must be lower, around $1,220, rising 2.5% a year — the calculator's figure is the ceiling, not the plan.
What this calculator leaves out
Tax on withdrawals from a pre-tax account, market variability — a bad first two years does far more damage than a bad last two — fees, and inflation.
Related calculators
- Retirement withdrawal calculator — the same question with inflation built in
- Immediate annuity — buying the same monthly figure from an insurer
- FIRE calculator — the balance you need for a given withdrawal