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Before You Run the Numbers
Three things decide how long a portfolio is projected to sustain withdrawals.
Most retirement anxiety is about complexity. Strip away the noise and you're left with three variables — how much you spend, how much you've saved, and how long it has to sustain you. Everything else is a rounding error.
\●/01 · Compounding
Compounding needs time more than a high return.
At a long-run 7% return, money roughly doubles every decade — which is why starting early tends to beat almost any clever move made late.
In 1626, Peter Minuit bought Manhattan for about $24 in goods. It sounds like the greatest swindle in history — but invested at a modest return, that $24 would have compounded over four centuries into a sum that dwarfs the island's value today.[1] The point isn't the trade. It's what time does to money.
At 7% — a commonly cited long-run assumption for a diversified portfolio — money doubles roughly every ten years, with no further effort on your part:[2]
This is why someone who starts early and does little often ends up ahead of someone who starts late and does everything right. But the average return hides something that matters just as much — the order the returns arrive in.[3] Two portfolios with the same thirty-year average can land in very different places.
A crash in year 2 of retirement
You're selling assets at a discount to cover living costs, with less capital left to recover. The early loss works against you for decades.
The same crash in year 20
The portfolio has already done most of its compounding. The identical loss, arriving later, does a fraction of the damage.
This is why the analysis doesn't assume an average return. It runs thousands of market sequences — some with bad years up front, some with them late — and reports the share in which the plan comes through. That share is a more honest number than any average.
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In the analysis · Toggle Expected Return between Conservative, Default, and Aggressive. Watch how the downside band shifts, not just the median.
\●/02 · The 4% Rule
Every million dollars supports roughly $40,000 a year.
A long-standing rule of thumb: a portfolio can support about 4% of its starting value each year, adjusted for inflation. So $1 million supports roughly $40,000 a year — though three things bend that number.
In 1994, a financial planner named William Bengen asked how much a retiree could draw each year and still have the money sustain a thirty-year retirement.[4] He tested it against historical markets back to 1926 — the Great Depression, 1970s stagflation, every crash in between. His answer: about 4% of the starting balance, adjusted for inflation each year.
Four years later, three professors at Trinity University replicated and extended the study.[5] The 4% figure held. It has become the most-cited number in retirement planning — not because it's perfect, but because nothing better has emerged in thirty years of trying. In practice it's close to linear: $1 million supports about $40,000 a year, $2 million about $80,000.
Three things complicate it:
01
A longer retirement
The 4% figure was calibrated for thirty years. Plan to ninety-five and the same million supports closer to $33,000 a year under the same assumptions.
~$33,000/yrsame $1M, 35-year horizon
02
Social Security
Every dollar of Social Security is a dollar the portfolio never has to provide. Waiting until seventy to claim raises the monthly benefit by about 24% versus claiming at sixty-seven.
[6]+24%claiming at 70 vs 67
03
Inflation
Inflation compounds the draw, not just the portfolio. $8,000 a month today is about $11,400 a month in twelve years at 3%. Most rules of thumb skip this. The analysis doesn't.
$8K → $11.4Kmonthly draw, 12 yrs at 3%
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In the analysis · The first section — What this plan can support — runs the 4% idea against your actual numbers: your horizon, your Social Security, your inflation assumption — not a textbook average.
\●/03 · The Three Levers
There are three ways to make a retirement plan work.
Spend less, save more, or need the money for less time. Every plan is some mix of these three — the portfolio-mix debates and tax tactics all sit downstream of them.
Most retirement anxiety comes from treating the problem as more complicated than it is. Get these three right and the details compound in your favor. Get them wrong and no detail saves you.
Lever 01
Spend less
The highest-leverage lever, because it cuts the draw and the required portfolio at the same time. Most people fine-tune the portfolio and leave the spend untouched.
~$125,000less needed per $500/mo cut
Lever 02
Save more
Contributions compound nonlinearly. An extra $1,000 a month over twelve years at 7% becomes roughly $240,000 — not $144,000. Starting one year earlier is worth about $100 more a month for the whole period.
~$240,000$1,000/mo, 12 yrs at 7%
Lever 03
Need it for less time
A plan built for eighty-five looks very different from one built for ninety-nine. With longevity the primary financial risk in retirement, planning conservatively on lifespan isn't pessimism — it's the honest assumption.
[7] The horizon you set is the question the analysis answers: it reports the age the median path sustains to, so you can see how long the plan holds — not just whether it clears the bar at the end.
to age 99the example plans use this horizon
The analysis holds all three in tension at once. Change one input and you see exactly how the others respond — not in isolation, but together, the way they actually work.
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In the analysis · The third section — When work becomes optional — shows the age at which the model projects your savings can cover spending through your planning horizon, alongside the age the median path sustains to at each confidence level. That's where all three levers meet, and where you see how long the plan holds.