1. What is Safe Withdrawal Rate?

The Safe Withdrawal Rate (SWR) is the percentage of a retirement portfolio that can be withdrawn each year with low risk of running out of money. For retirees over 70, this rate is typically adjusted for shorter time horizons.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• 5% — Base safe withdrawal rate for traditional 30-year retirement
• Horizon adjustment — Reduces rate for shorter expected retirement periods

Explanation: The calculator adjusts the standard 4% rule upward for shorter retirement horizons typical after age 70, while still maintaining safety against portfolio depletion.

3. Importance of Safe Withdrawal Rate

Details: Calculating an appropriate withdrawal rate is crucial for retirement planning, ensuring your savings last throughout retirement while allowing for necessary expenses and lifestyle.

4. Using the Calculator

Tips: Enter your total portfolio value, current age (must be 70+), and expected investment horizon. The calculator will determine a safe annual withdrawal rate and amount.

5. Frequently Asked Questions (FAQ)

Q1: Why is the rate higher than the traditional 4% rule?
A: For retirees over 70, the time horizon is typically shorter, allowing for a slightly higher withdrawal rate while maintaining safety.

Q2: How is the horizon adjustment calculated?
A: The adjustment scales the withdrawal rate based on your expected retirement duration compared to a standard 30-year retirement.

Q3: Does this account for inflation?
A: The calculated amount represents today's dollars. You may need to increase withdrawals annually to maintain purchasing power.

Q4: What investment return assumptions are used?
A: The calculation assumes a balanced portfolio with moderate growth that historically supports these withdrawal rates.

Q5: Should I use this if I have other income sources?
A: This calculates total portfolio withdrawals. You may need less from your portfolio if you have pensions, Social Security, or other income.