Compound Interest Calculator with Withdrawals
Month-by-month simulation through a saving phase and a drawdown phase. Saved in this browser as you type. Before taxes.
Balance over time
7.0% nominal (7.23% effective), 2.5% inflation. No withdrawals.
Balance = total paid in + cumulative interest − cumulative withdrawals, exactly. Shaded bands mark the saving, growing and drawing-down phases.
When withdrawals start
No withdrawals are set, so this is a pure growth projection. Enter a monthly withdrawal or a share of the balance to see how long the money lasts and the most you could take.
Your timeline
- Start with $10,000 at year 0.
- Year 1 to Year 20: paying in $500 a month.
- No withdrawals are set, so this is a pure growth projection.
- Ends year 30 with $604,608.
Plan backwards from a target
Name the balance you want and this works out the level monthly contribution that gets there over your 20 contribution years, with everything else in your plan left as it is.
What if returns are not steady?
Everything above assumes the return is identical every single month, which no real investment does. This runs the same plan many times over with a different random return each month, so you can see how often it actually works rather than how it looks on average. Results appear here and on the "Range of outcomes" chart.
How this is calculated
The nominal annual rate r compounded n times a year is first converted to an effective annual rate, then to the equivalent monthly rate:
EAR = (1 + r/n)^n - 1 (or e^r - 1 if continuous) net = (1 + EAR) × (1 - fee) - 1 month = (1 + net)^(1/12) - 1
If the rate is marked as inflation-adjusted, inflation is multiplied back in before fees: (1 + EAR) × (1 + inflation) - 1. That way the today's-dollar figures compound at exactly the rate you entered, rather than having inflation taken off twice.
The balance is stepped forward one month at a time. Each month the contribution and withdrawal are applied at the end of the month, with growth applied in between. Your current settings give an effective 7.23% a year after fees, or 0.5833% a month, which is 4.61% a year above inflation.
Year 0 is the starting point with no growth applied. Year y covers months (y-1)×12+1 through y×12. Contributions run during years 1 to 20; the first withdrawal falls in year 21.
When a cashflow is set to rise with inflation, the amount you enter is what is paid in its first year, and it steps up by 2.5% at the start of each year after that. Contributions count from year 1; withdrawals count from year 21, so the withdrawal you enter is exactly what is paid each month of year 21.
A share-of-balance withdrawal takes one twelfth of the yearly percentage from whatever the balance is that month. A fixed withdrawal is capped at the balance available, so the balance never goes negative, and anything that could not be paid is reported as a shortfall rather than quietly dropped.
Today's-dollar figures divide the year-y balance, and the cashflows made during year y, by (1 + inflation)^y. Real growth is then the change in real balance not explained by real contributions and withdrawals, so it can be negative when the return does not beat inflation, and the identity balance = paid in + growth − withdrawals holds exactly in both modes.
The "most you could take" and "plan backwards" figures are found by bisection: the projection is re-run with a trial amount until the largest withdrawal that never runs dry, or the smallest contribution that reaches the target, is pinned down to the cent.
The volatility test draws each month's return from a lognormal distribution whose mean matches the rate above, using m = ln(1+g) − s²/2 with s the monthly standard deviation. That keeps the average across all runs equal to the steady-rate answer, while the typical run lands below it.
What this does not model
- Tax. No income tax, capital gains tax, dividend tax or tax-wrapper rules are applied. In a taxable account your effective return will be lower than the rate you enter.
- Trading costs and bid-offer spreads. The fee field covers charges that are a percentage of the balance. Costs per trade are not deducted.
- Contribution limits and account rules. Annual caps, employer matching, early-withdrawal penalties and required minimum distributions are all ignored.
- One-off events. A lump sum in or out, a pause in contributions, or a different withdrawal later on cannot be scheduled. Save separate scenarios to compare alternatives instead.
- Fat tails and crashes. The volatility test draws returns independently from a lognormal distribution. Real markets have fatter tails than that, and returns are not fully independent between months, so genuine worst cases can be worse than the 10th percentile shown here.
- Changing your mind. Real people cut spending in a downturn. A fixed withdrawal keeps going regardless, which makes the failure rate pessimistic compared with someone who adapts. The share-of-balance mode is the opposite extreme: it adapts every month, so it never fails but the income can fall a long way.
- Variable inflation. Inflation is a single constant rate, used both to index cashflows and to convert to today's dollars.
This is an arithmetic tool for exploring scenarios, not financial advice. For decisions that matter, check the numbers with a licensed adviser.
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