Retirement Income Calculator
Use this retirement income calculator to turn a retirement balance into a steady annual and monthly income that lasts a set number of years.
What it does
The Retirement Income Calculator turns a retirement balance into a steady income that lasts a set number of years. It treats the savings like an annuity: the balance keeps earning a return while you draw a level amount each year until it runs out.
Data sources & parameters
This calculator uses standard financial formulas and runs entirely in your browser. It needs no external rate data — your result is computed only from the values you enter above.
We always strive to use the latest data for every variable so our results and reports are as accurate as possible. Even so, errors are possible — you should not rely on this tool or its report alone, and we accept no liability for any decision made based on it.
The formula
Annual income = balance × i ÷ (1 − (1 + i)^(−years)), where i is the annual return; at a 0% return it is simply balance ÷ years
How it works
It solves for the fixed annual payment that empties the balance over the chosen number of years, given the assumed return. The remaining balance grows by the return each year and then the income is withdrawn, so later withdrawals still benefit from growth.
Where it is used
- Estimating a sustainable yearly or monthly income from a nest egg
- Testing how return and time horizon change the income you can take
- Sense-checking a drawdown plan before retirement
Worked example
Someone retires with $1,000,000.00 expecting a 5% return and wants the money to last 30 years. The plan supports … a year, about … a month, and withdraws … in total over the horizon.
What the retirement income calculator does
The retirement income calculator shows how much income a pot of savings can provide, and for how long. You enter the balance you expect to retire with, the annual return you assume it will keep earning, and the number of years you want the income to last. The tool works out the steady annual income that draws the balance down to zero over exactly that period, the monthly equivalent, and the total you would withdraw across the whole retirement.
How the calculation works
The tool uses the standard annuity payment formula. Each year the remaining balance earns the assumed return and you withdraw the same income, and the calculator finds the income level at which this empties the account exactly at the end of your chosen horizon.
Annual income = balance multiplied by the return, divided by one minus the quantity (one plus the return) raised to the power of the negative number of years. At a zero return this reduces to the balance divided by the number of years. The monthly income is the annual figure divided by twelve, and the total withdrawn is the annual income multiplied by the number of years.
Because the unspent balance keeps compounding, the total withdrawn over retirement is usually far larger than the starting balance. The difference is the growth your money earns while it is being spent, which is why a well-invested balance can support more income than a simple division would suggest.
The three inputs
- A larger retirement balance supports a proportionally larger income, so every extra amount saved before retirement turns directly into income later.
- The annual return is the rate the remaining balance earns while you draw it down. A couple of percentage points can meaningfully raise the sustainable income, because growth keeps refilling the pot between withdrawals.
- The longer the income must last, the lower each year's payment, since the same balance is spread across more years. This figure depends on when you stop working and how long you expect to live.
Why the assumed return matters
Two people with the same balance and horizon can end up with very different sustainable incomes because of the return they assume. It is the most sensitive input and the one you control least once retired. Markets do not deliver a smooth, constant return, and the calculator uses a single average for clarity.
A run of poor returns early in retirement, while the balance is largest, does more damage than the same poor returns later. Many people therefore plan with a deliberately cautious return assumption to leave a margin of safety.
Using the result
Use the income figure to compare scenarios: how much more income an extra decade of saving buys, how sensitive your plan is to the assumed return, or how stretching the horizon by a few years lowers the yearly figure. Run several versions to see the range of outcomes.
For a more conservative view, enter a real return by subtracting expected inflation from a nominal return; the income then stays roughly constant in purchasing power. Withdrawals may be taxed depending on the type of account and your country's rules, so the spendable amount could be lower than the gross figure.
Combining it with other tools
Check the income figure against a safe withdrawal rate to see whether the implied percentage of your balance is sustainable over a long retirement. If the income falls short of what you need, a retirement shortfall calculation shows how much extra capital would close the gap.
About This Retirement Income Calculator
Use this retirement income calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.
Frequently asked questions
How does the retirement income calculator work?
Why does the income depend on the return I assume?
What happens at a 0% return?
Does this account for inflation or taxes?
Is my data kept private?
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