1. What is the Retirement Income Equation?

The retirement income equation estimates annual retirement income from total savings and withdrawal rate. It helps plan sustainable retirement spending based on your nest egg.

2. How Does the Calculator Work?

The calculator uses the simple equation:

Where:

• \( Savings \) — Total retirement savings in USD
• \( Rate \) — Annual withdrawal rate as decimal (e.g., 0.04 for 4%)

Explanation: This calculates the annual income you could sustainably withdraw from your retirement savings.

3. Importance of Retirement Income Calculation

Details: Proper retirement planning requires understanding how much income your savings can generate without depleting your funds too quickly.

4. Using the Calculator

Tips: Enter your total retirement savings in USD and your planned annual withdrawal rate as a decimal (e.g., 0.04 for 4%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a safe withdrawal rate?
A: The traditional "4% rule" suggests 4% as a safe initial withdrawal rate, adjusted annually for inflation.

Q2: Does this account for investment growth?
A: No, this simple calculation assumes a fixed withdrawal rate from principal. More complex models account for investment returns.

Q3: Should I include Social Security in this calculation?
A: This calculates only portfolio-derived income. Social Security would be additional income.

Q4: How does inflation affect this?
A: The simple calculation doesn't account for inflation. In practice, you may need to increase withdrawals annually to maintain purchasing power.

Q5: What about taxes?
A: This shows pre-tax income. Your actual available income may be less after accounting for taxes.