It simulates regular withdrawals from an account that is earning a fixed investment return. You can enter an annual inflation rate to automatically increase the withdrawal amount each period.
You can also use the Additional Withdrawal column in the Payout Schedule to make adjustments to the regular withdrawal amounts.
Please note that this estimator have a few limitations:
- All calculations are just estimates as
- Investment returns may change
- Inflation may change
- Returns may be calculated differently depending on the investment
- This Estimator compounds investment returns based on chosen withdrawal frequency
- Taxes are not accounted for and assumed to be zero.
Some notes:
- Date of Retirement: This date is used as the first first date in the Payout Schedule and to calculate the Years Until Retirement.
- Annual Investment Returns: This spreadsheet assumes a fixed annual investment return, though actual investment returns may vary. It also assumes that returns are earned tax free.
- Payment Type: This is used to specify whether the withdrawals are made at the beginning or end of each period. When you choose "Beginning of Period", the first payment is made at the end of period 0, which is the same as saying the beginning of period 1.
- Annual Inflation Rate: This rate is used to gradually increase the withdrawal amount each period. It is also used to calculate the inflation-adjusted Initial Withdrawal. Generally, inflation is 2 to 3% per year.
- Current Age: Entering your Current Age and the Date of Retirement makes it possible to estimate your age at the time of the last payment.
- Initial Withdrawal in Today's Dollars:
- This is the amount used as the first withdrawal in the payout schedule. It is automatically inflation adjusted, based on the Years Until Retirement.
- If you want to use a flat withdrawal amount, set the Inflation Rate to 0%.
- Number of Payouts: It is capped at the 973th payout
- Age at Last Payout: As Number of Payouts is capped, the age will be capped as well.
Disclaimer: This spreadsheet should not be construed as financial advice. The results may not be guaranteed to be exact, and may not apply to your specific situation. Users should carry out independent verification of results provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on the results from this spreadsheet. Please consult a qualified professional regarding financial decisions.
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