MyAICalc Logo
MyAICalc Personal AI Calculator Hub
Retirement Decumulation Engine

Annuity Payout

Plan your exit. Analyze how long your retirement nest egg will last under different withdrawal strategies and inflation scenarios.

Decumulation Logic

Growth & Inflation

Safe Withdrawal Rule: The **4% Rule** suggests you can withdraw 4% of your starting balance (inflation-adjusted) annually with a high probability of not outliving your money.

Retirement Decumulation Analytics

Managing the
Retirement Decumulation

Accumulating wealth is a sprint, but Decumulation—the process of spending down your assets in retirement—is a marathon. The math changes significantly when you stop contributing and start withdrawing. The biggest enemy is no longer just market volatility, but Inflation and Longevity Risk. Our calculator helps you model different withdrawal strategies to ensure your "last check" is the one you write to the funeral home.

4% Rule

A common benchmark: Withdrawing 4% of your initial portfolio (adjusted annually for inflation) has historically lasted 30 years in almost all market conditions.

Inflation Drag

If inflation is 3%, your $3,000 monthly payout must increase to $4,000 in 10 years just to maintain the same purchasing power.

Depletion Rate

The percentage of your principal you consume each year. A rate over 6% significantly increases the risk of outliving your assets.

The Sequence of Returns Risk

One of the most dangerous factors in retirement is Sequence Risk. If the stock market drops 20% in the *first* year of your retirement, and you still withdraw your fixed monthly amount, you are selling assets at their lowest value. This can permanently damage your portfolio's ability to recover. Our calculator helps you understand how conservative you need to be with your initial withdrawal rate.

Fixed Amount vs. Fixed Percentage

There are two primary ways to withdraw money:

  • Fixed Dollar Amount: Provides a stable lifestyle, but risks exhausting the portfolio if the market performs poorly.
  • Fixed Percentage: You withdraw, for example, 5% of your *current* balance each year. This ensures the portfolio never hits zero, but your income will fluctuate with the market.

The Impact of Longevity

Modern medicine means retirees are living longer than ever. A "safe" plan must now account for a 30-to-40-year retirement window. If you retire at 65 and live to 95, your money needs to survive three decades of inflation and potentially high medical costs.

Decumulation Pro Tips:

  • • The Bucketing Strategy: Keep 2 years of cash in a safe savings account and keep the rest invested in stocks/bonds to fight inflation.
  • • Dynamic Spending: Reduce your spending by 10% during market downturns to significantly increase the survival probability of your nest egg.
  • • Tax-Efficient Withdrawal: Withdraw from taxable brokerage accounts first, then Traditional IRAs, and Roth IRAs last to maximize tax-free growth.

The Role of Annuities

A commercial **Immediate Annuity** can convert a lump sum into a guaranteed monthly check for life. This eliminates longevity risk, but you usually lose control over the principal and the ability to leave an inheritance.

How to Use This Tool

Input your "Initial Nest Egg" and select your "Withdrawal Mode." If you choose Fixed $, enter your desired monthly income and the "Inflation Rate." If you choose Deplete, enter the number of years you want the money to last. Review the Fund Duration result to see the "Moment of Exhaustion." Use the Capital Depletion Analysis to track your forecast survival rate.