Calculator inputs
Example data table
| Profile | Age → Retire | Savings | Contribution | Spend (today) | Return / Vol | Inflation | Runs |
|---|---|---|---|---|---|---|---|
| Conservative | 40 → 65 | 35,000 | 2,500 | 10,000 | 5% / 8% | 3% / 1% | 5,000 |
| Balanced | 35 → 60 | 25,000 | 3,000 | 12,000 | 7% / 12% | 3% / 1.5% | 3,000 |
| Aggressive | 30 → 55 | 20,000 | 5,000 | 14,000 | 9% / 18% | 3% / 2% | 10,000 |
Values are illustrative. Use your own assumptions for better insights.
Formula used
- Real return approximation: real ≈ (1 + r) / (1 + i) − 1
- Portfolio growth: balance(t+1) = balance(t) × (1 + r) + contribution
- Fixed real withdrawals: spending grows each year with inflation.
- Percent withdrawals: withdrawal = (percent ÷ 100) × current balance.
- Longevity risk (simulation): probability that balance reaches zero before the retirement horizon ends.
Simulation draws annual returns and inflation from a normal distribution using your mean and volatility inputs. Results are approximate and for planning.
How to use this calculator
- Enter your ages, savings, and annual contributions.
- Set your desired annual retirement spending in today's money.
- Choose return and inflation assumptions, including volatility.
- Select a withdrawal rule that matches your spending style.
- Run the calculation and review the risk score and percentiles.
- Download CSV or PDF for records and comparisons.
Why longevity risk matters in retirement plans
Longevity risk is the chance you outlive your savings. A retirement starting at 60 can last 25–35 years, so small assumption errors compound. If spending rises just 1% more than expected, the gap widens every year. This calculator links your ages, savings, contributions, and spending goal to an estimated depletion probability. Running thousands of trials helps you see outcomes beyond a single forecast.
The spending gap created by longer lifespans
Longer life increases withdrawal years and reduces the margin for overspending early. Extending a plan from age 90 to 95 adds five more inflation-adjusted spending years. Those extra payments also remove years of potential compounding on remaining assets. If you enable longevity uncertainty, some simulations extend the horizon by several years, revealing how “extra life” amplifies risk. In practice, a longer horizon often requires either higher savings at retirement or lower annual spending.
Market volatility and sequence risk
Average returns are not the full story. Two portfolios can share a 7% long-run mean return but suffer different early losses. Negative returns near retirement can shrink the base you withdraw from, pushing the plan toward depletion even if later returns recover. The simulation uses return volatility to generate many possible paths, then reports percentile ranges for retirement and ending balances.
Inflation and healthcare cost pressure
Retirement spending is rarely flat in nominal terms. Even moderate inflation increases the cash you need each year to maintain purchasing power. Healthcare and long-term care costs may rise faster than general inflation, so testing higher inflation assumptions can be prudent. The tool lets you vary both inflation mean and volatility to see how sensitive your plan is to price shocks.
Interpreting the risk score and improving resilience
The risk score converts the simulated depletion probability into an easy 0–100 measure, where higher is better. Compare scenarios by adjusting retirement age, contributions, spending, and longevity uncertainty. You can also compare fixed real spending versus a percent withdrawal, which naturally reduces spending after market declines. Use the deterministic sustainable spending estimate as a quick “first pass,” then rely on simulation for risk-aware decisions. Track changes with CSV and PDF exports.
FAQs
1) What does “probability of running out” mean?
It is the share of simulations where your balance hits zero before the retirement horizon ends. Lower percentages generally indicate a more resilient plan under your assumptions.
2) Why do results change when I rerun the calculator?
The simulation uses random draws for returns, inflation, and lifespan variation. With more runs, the results become more stable, but small differences are still normal.
3) Should I use fixed real spending or percent withdrawals?
Fixed real spending keeps purchasing power steady but can increase depletion risk after market declines. Percent withdrawals adjust spending with portfolio size, often reducing risk while creating variable income.
4) How does “longevity uncertainty” affect the estimate?
It widens the range of retirement lengths around your planned age. Longer simulated lifespans require more withdrawals, which can raise depletion probability even if returns match expectations.
5) What inputs most strongly reduce longevity risk?
Lower retirement spending, higher contributions, and delaying retirement usually have the biggest impact. Reducing return volatility through diversification can also improve the outcome distribution.
6) Is this a replacement for professional advice?
No. It is a planning tool using simplified assumptions and normal-distribution simulations. Use it to compare scenarios and discuss choices with a qualified financial professional.