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Wealth Depletion Simulator

Simulate exactly how long your retirement portfolio will last by modeling fixed monthly withdrawals against inflation and compound market returns.

The Downward Slope

$500,000
$4,000/mo

This amount will automatically increase each year by the inflation rate.

5.0%
3.0%

"What-If" Analysis

See exactly how many years you gain or lose by adjusting your monthly budget.

Exact Depletion Date
Age 76.9
(11.9 Years of Runway)
Total Value Extracted
$672,725
Before going broke
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What is The Danger of Fixed Spending in Retirement?

Most retirees vastly underestimate how destructive a fixed monthly withdrawal protocol is when inflation is applied over time. A portfolio depletion chart is rarely a straight line. Because spending inflates while compounding principal shrinks, the curve accelerates downward traumatically in the final 3 to 5 years.

Mathematical Foundation

Future Spend=Base Monthly Need×(1+Inflation Rate)Years\text{Future Spend} = \text{Base Monthly Need} \times (1 + \text{Inflation Rate})^{\text{Years}}
Future Spend\text{Future Spend}= The actual exact dollar amount required from the portfolio to maintain buying power in future years.
Inflation Rate\text{Inflation Rate}= The annualized loss of purchasing power (historically 2.5% to 3.5%).

Laws & Principles

  • The Waterfall Effect: Because you inflate your monthly spend while your compounding portfolio principal shrinks, the depletion curve accelerates downward dramatically in the final 3-5 years. This is a logarithmic collapse.
  • Sequence of Returns Risk: A market crash in Year 1 of retirement is catastrophically more damaging than the same crash in Year 20. Those who draw fixed amounts from a crashed portfolio permanently lock in accelerated depletion.
  • Secondary Buffers: This mathematical reality is why Social Security, a paid-off home, or a 2-year liquid cash buffer (to avoid selling stocks during a crash) are critically necessary backstops.

Step-by-Step Example Walkthrough

" A retiree starts with a $500,000 portfolio, needs $4,000/mo, assumes 5% market return, and faces 3% inflation. "

  1. 1. Year 1 Start: $500,000.
  2. 2. Year 1 Withdrawals: $48,000 ($4,000 x 12).
  3. 3. Year 1 Market Return: 5% applied to the remaining balance.
  4. 4. Year 2: Monthly spend inflates by 3% to $4,120/mo.
  5. 5. The engine loops this math 1,200 times (100 years of months) or until balance hits zero.
Final Result: Because $4,000/mo represents a 9.6% withdrawal rate on $500k, the 5% return cannot keep up. The portfolio hits zero in 11.2 years.

Quick Answer: How does the Wealth Depletion Simulator work?

The Wealth Depletion Simulator calculates exactly when a nest egg will run out. By inputting your starting wealth and desired monthly spend, the engine maps withdrawals forward in time — automatically adjusting spending for inflation while crediting market returns. The output is a definitive timeline showing the exact age your money reaches zero.

Portfolio Mechanics

Inflationary Drain

Year N Withdrawal = Base Spend * (1 + Inflation)^N

The core issue with wealth depletion is the compound force of inflation. If you need $5,000/month today, you will need nearly $10,000/month twenty years from now (at 3.5% inflation). If your portfolio only generates 5% returns, it fails to cover the inflated withdrawal and preserve principal — triggering a rapid "Waterfall" collapse.

Retirement Reality Checks

✗ The Over-Withdrawal Trap

A standard American retirement failure

  1. Starting Capital: $1,000,000
  2. Monthly Need: $6,000 / month
  3. Market Returns: 5% | Inflation: 3%

→ $6,000/mo represents a 7.2% withdrawal rate on $1M. Despite 5% market returns, 3% inflation creates a structural deficit. The portfolio hits zero in Year 17.

✓ The Infinite Glide

Mathematical escape velocity

  1. Starting Capital: $2,000,000
  2. Monthly Need: $5,000 / month
  3. Market Returns: 7% | Inflation: 3%

→ $5,000/mo on $2M is only a 3% withdrawal rate. The 7% return easily outpaces 3% inflation. The portfolio climbs — reaching "Never Depletes" status and leaving a massive inheritance.

Inflation Impact Table

Years in Retirement Cost of $5,000/mo (at 3% Inflation)
Year 1 $5,000 / mo ($60,000 / yr)
Year 10 $6,719 / mo ($80,628 / yr)
Year 20 $9,030 / mo ($108,360 / yr)
Year 30 $12,136 / mo ($145,632 / yr)

Pro Tips & Safety Protocols

Do This

  • ✓Use "What-If" Analysis. Click "Spend -$500" to instantly see how cutting five hundred dollars per month mathematically extends your portfolio's survival by 5+ years. Small adjustments compound dramatically.
  • ✓Establish a Cash Buffer. Hold 1-2 years of living expenses in a high-yield savings account. When markets crash 20%, draw from cash instead of liquidating stocks — entirely avoiding Sequence of Returns collapse.

Avoid This

  • ✗Don't assume straight-line returns. This tool uses static geometric returns for a baseline. The real market swings violently — a 10% drop in Year 1 followed by a 20% gain in Year 2 produces a far worse result than the static 5% average suggests.
  • ✗Don't ignore healthcare shock costs. Models assume a smooth inflationary curve. A sudden $40k out-of-pocket healthcare expense in Year 8 can permanently dislodge the compound interest engine — crashing the depletion timeline by years.

Frequently Asked Questions

What is a safe withdrawal rate (SWR)?

The gold standard in financial planning is a 4% Initial Withdrawal Rate. According to the original Trinity Study, if you withdraw exactly 4% of your starting portfolio in Year 1 and adjust that dollar amount upward only for inflation each year, the portfolio has a 95%+ chance of surviving exactly 30 years across nearly all historical market conditions.

Should I include Social Security in "Monthly Spend"?

No. Subtract your guaranteed income sources from your lifestyle cost before entering the figure here. If you need $8,000/mo to live, but Social Security and pensions guarantee $3,000/mo, the portfolio "Monthly Spend" input is only the $5,000/mo gap that the portfolio must actually fund.

What happens to the depletion timeline if I delay retirement by 2 years?

Delaying retirement by 2 years creates a double benefit: (1) your portfolio has 2 additional years to compound without withdrawals, and (2) you have 2 fewer withdrawing years to survive. This combination is mathematically powerful — for many portfolios near the edge, delaying by just 24 months can extend the depletion timeline by 5 to 8 years or push the outcome to "Never Depletes."

Why does the depletion graph curve down so dramatically at the end?

This is the Logarithmic Collapse — caused by two forces compounding against each other simultaneously. Your monthly spending is growing exponentially (inflation), while your portfolio balance is shrinking (withdrawals exceeding returns). As the portfolio balance gets smaller, the market return component generates fewer dollars, making it progressively easier for the inflating withdrawal to overwhelm it. The final few years before zero see an almost vertical drop because the compounding math has fully flipped against the retiree.

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