Retirement Withdrawal Rate Simulator
Monte Carlo simulation runs thousands of market paths to compare three withdrawal strategies — the 4% Rule (fixed), dynamic withdrawal (tracks market value), and Guyton-Klinger guardrails (adjusts only when a guardrail is hit) — showing your portfolio's 30-year survival rate, median balance, and how bad the worst case gets. The real enemy of retirement planning is not average returns but sequence-of-returns risk: hit a bear market in the first five years, and the same withdrawal rate may simply not last. That is exactly why you must simulate instead of relying on averages.
Inputs
Withdraw $40,000 per year
Inflation already deducted. A 60/40 portfolio has historically done ~4-5% real; all-stock ~6-7%.
Assumptions and logic of the three strategies
- Annual return rₜ follows a normal distribution N(μ, σ²); μ = expected real return, σ = volatility
- All amounts are real — inflation is already deducted from returns, so withdrawals need no CPI adjustment
- Withdraw at the start of each year, returns applied at year-end: Bₜ₊₁ = (Bₜ − Wₜ) × (1 + rₜ)
- Taxes and fees ignored; annual returns are mutually independent (no serial autocorrelation)
Year 1: W₀ = starting assets × withdrawal rate; every year after withdraws the same real amount Wₜ = W₀. Failure is defined as the balance hitting zero within 30 years. The classic study backtested a US 60/40 portfolio over 1926-1976; 4% survived ~95% of the time.
Withdraw Wₜ = Bₜ × withdrawal rate each year. Mathematically never hits zero, but income swings violently with the market — after a bear year the next withdrawal can be halved. Suits people with other fixed income (pension, rent) to fill the gap.
Uses the 4% Rule as a baseline; each year check the current withdrawal rate = Wₜ / Bₜ:
- If > initial rate × (1 + 20%) → portfolio has shrunk too much; next year Wₜ₊₁ = Wₜ × (1 − 10%)
- If < initial rate × (1 − 20%) → portfolio has surged; next year Wₜ₊₁ = Wₜ × (1 + 10%)
- Between the two guardrails → keep last year's amount
This tool implements a simplified version (CPR withdrawal rule only, without the PMR/PR allocation rules).
💡 The next to each card title also shows a summary — hover to view.
- Survival rate < 85%: the withdrawal rate is too high or the return expectation too optimistic — consider dropping to 3.5% or delaying retirement.
- Dynamic withdrawal never hits zero, but in the worst scenarios annual income can be cut in half — can you live with that?
- GK guardrails usually strike the best balance between survival and income stability, at the cost of disciplined pay cuts.
- Median ending balance
- $1,036,191
- Median total withdrawn
- $1,200,000
- Median ending balance
- $1,042,712
- Median total withdrawn
- $1,234,001
- Median ending balance
- $1,060,007
- Median total withdrawn
- $1,201,712
Median balance path (real USD)
1,000 runs · yearlyLines show the median — actual outcomes spread on both sides of it. Higher survival and a flatter line mean a more robust strategy.
Ending balance distribution (histogram)
x-axis capped at P99 · y-axis = number of runsEach bar counts the runs that ended in that asset range. Narrower, more concentrated bars mean more predictable outcomes; further right means more money left at the end. Tall bars near $0 on the left = ruin scenarios.
Ending balance box plot + ruin / VaR / CVaR
Relative to the shared max across the three strategiesBox = P25–P75, whiskers extend to P10 / P90, the white line is the median.Red shading marks the worst-10% zone, the dashed line marks VaR₁₀ (10th-percentile ending balance), and the red dot marks CVaR₁₀ (mean of the worst 10%). A box hugging $0 = clear ruin risk.
Want the evidence and failure cases behind the 4% Rule?
All of this site's retirement portfolio research lives in the Asset Allocation collection — from multi-asset ETF backtests to withdrawal-strategy evidence, 54 articles as a set.
This tool is for education only. The Monte Carlo simulation assumes normally distributed returns — real market tail risk is greater. Results are not investment advice.