The formula
With an annual return r, the monthly rate is m = (1 + r)1/12 − 1. Each month the withdrawal W comes out and the rest grows: Balance = (Balance − W) × (1 + m). The largest withdrawal that lasts exactly N months is W = B × m / ((1 − (1 + m)−N) × (1 + m)).
Example: $500,000 at 6% with $3,000 a month
Withdrawing $3,000 a month ($36,000 a year, 7.2% of the starting balance) is more than the account earns, so the balance falls. It lasts about 28 years 4 months, and over that time you withdraw $1,017,416.71 in total, of which $517,416.71 is growth. To make $500,000 last exactly 30 years at 6%, withdraw about $2,932.58 a month.
How long $500,000 lasts at 6% by monthly withdrawal
| Monthly withdrawal | Money lasts | Balance after 20 years |
|---|
| $2,000.00 | Indefinitely | $692,276.20 |
| $2,500.00 | 59 years 7 months | $464,453.32 |
| $3,000.00 | 28 years 4 months | $236,630.43 |
| $3,500.00 | 20 years 3 months | $8,807.55 |
| $4,000.00 | 16 years | $0.00 |
| $5,000.00 | 11 years 5 months | $0.00 |
Still saving instead of withdrawing? The compound interest calculator projects growth with regular contributions, and the high-yield savings calculator handles monthly deposits at a bank APY.
Frequently asked questions
How does compound interest work when you make withdrawals?
Each month the withdrawal comes out first and the remaining balance earns that month’s return. As long as the monthly withdrawal is smaller than the monthly growth, the balance keeps rising; once it is larger, the balance shrinks faster each year because less is left to compound.
How long will $500,000 last if I withdraw $3,000 a month?
At a 6% yearly return, $500,000 with $3,000 taken out at the start of each month lasts about 28 years 4 months. At 0% it would last only about 13 years 11 months.
How much can I withdraw each month so my money lasts 30 years?
Use the annuity formula W = B × m / ((1 − (1 + m)^−N) × (1 + m)), where m is the monthly rate and N the number of months. For $500,000 at 6% over 30 years that is about $2,932.58 a month.
What is the 4% rule?
The 4% rule says you can withdraw 4% of your savings in the first year of retirement and raise that amount with inflation each year, with a good chance the money lasts 30 years. On $500,000 that is $20,000 a year, about $1,667 a month. Set the yearly raise to your expected inflation to model it.
How do I keep my savings from running out?
Keep the yearly withdrawal below what the balance earns. At a 6% return, withdrawals up to about 5.8% of the balance a year leave the principal untouched, because withdrawals at the start of each month earn slightly less than the full year’s return.
Does this work as a savings withdrawal or distribution calculator?
Yes. For a savings account, enter its APY as the rate; for an investment or retirement account, enter an expected average return. Real investment returns vary year to year, so treat the result as a guide rather than a guarantee.