To get an accurate calculation, let’s say that a person has saved $100,000 at an expected return of 5% and an inflation rate above 3%. They would then need to take into account taxes as well as inflation. They can then determine the amount they are comfortable withdrawing each year, without having to run out of money in 30 years.
Financial advisors generally recommend withdrawing only 4-5% of the invested capital each year. This helps to ensure funds will last longer and also allows savers maintain enough purchasing power, even in times of high inflation. By taking into consideration all factors (e.g. You can calculate a withdrawal rate that is safe by taking into account all relevant factors (e.g.