Savings of 300,000 earning an assumed 5% a year run out in year 20 if 2,000 is taken out every month. Taking 1,500 a month makes them last until year 35; taking 2,500, until year 14.
Each month the remaining balance earns its return and the withdrawal is taken out. When the withdrawal is more than the balance earns, the balance falls, and as it falls it earns less, so it falls faster.
Three withdrawal amounts
The same savings and the same assumed return each time:
| Taken out each month | Per year, as a share of the savings | Runs out in year | Total taken out |
|---|---|---|---|
| 1,500 | 6% | 35 | 622,178 |
| 2,000 | 8% | 20 | 464,593 |
| 2,500 | 10% | 14 | 412,694 |
What the example leaves out
The withdrawals here do not rise with prices, and the return is the same every year. Real returns vary, and a fall in the early years shortens how long the money lasts more than the same fall later on.