Retirement Calculator and Withdrawal Rate: Test Your Number

3.9%. In Morningstar's research, that is the highest starting withdrawal rate that still left money in the account in 90% of simulated futures over a 30-year retirement. If you're using a retirement calculator and withdrawal test to figure out how much you can take out each year, start there. It's a baseline drawn from research. It isn't a rule, and your own savings, age, spending and other income will move the number up or down. The rest of this article covers how to test your figure, what the result means, and what most calculators leave out.

The quick answer: how much can you take out each year?

Morningstar's State of Retirement Income research (published December 2025) puts the safe starting withdrawal rate at 3.9% for a 30-year retirement. Here, "safe" has a specific meaning: a 90% chance that money is still left after 30 years. The model assumes a portfolio of 30% to 50% stocks and a fixed withdrawal that rises with inflation each year. It also uses forward-looking return forecasts instead of historical backtests. (Morningstar, The State of Retirement Income)

Here's the math with simple numbers:

You can also work it backwards. Spending $4,000 a month from savings is $48,000 a year, and at 3.9% that takes about $1.23 million.

Two caveats right away. First, this is the money your savings have to cover. If Social Security or a pension pays part of your bills, take that out of your spending before you do the math. Second, the 3.9% figure tells you how the average new retiree's odds look. It says nothing about yours. That's what a calculator is for.

How a retirement calculator and withdrawal test actually works

Most withdrawal calculators fall into one of two groups. They answer different questions.

"How long will my money last" calculators

These are the simple ones. You enter a balance, a yearly withdrawal, an expected return, and sometimes taxes. The tool gives back a number of years until the money runs out. Western & Southern's retirement withdrawal calculator is a clean example.

The trouble is that it uses one return, every year. Markets don't work like that. A plan that "lasts 31 years" at a steady 6% can fail much sooner if the bad years arrive early.

Monte Carlo calculators

Monte Carlo sounds technical. The idea is simple: rather than assuming one future, the calculator generates hundreds or thousands of possible ones. Each has its own random mix of good years, bad years and inflation. Then it counts how many of those futures stay funded.

• The Boston College Center for Retirement Research calculator runs 100,000 market simulations to estimate the chance your savings last. (CRR, How Long Will Retirement Savings Last?)
• Schwab's Retirement Income Calculator uses an 80% success rate by default, meaning savings last in about 80% of simulated scenarios. (Schwab, Retirement Income Calculator Methodology)
• Monte Climb runs your savings, age and monthly spending through 1,000 simulated futures and gives back the share that stay funded.

So you get a probability, not a projection. That's a more honest answer, because nobody knows which future you'll get.

What a "success rate" really means

This part trips people up, and most calculators don't explain it.

Different tools aim for different targets. Schwab defaults to 80%. Morningstar's 3.9% is based on 90%. Neither one is "correct." A higher target buys a bigger safety margin, and the price is spending less today. If two calculators give you different "safe" amounts, check whether they're aiming at the same success rate before deciding one is wrong.

"Failure" doesn't always mean disaster. In most Monte Carlo tools, a failed future is any future where the money runs out before the plan ends. Running dry at 93 and running dry at 72 are very different outcomes, but both count as one failure. When you read a result, ask:

• When does the money run out in the bad futures?
• How big is the gap? Is it a few lean years, or a decade?
• What would a small cut in spending do to the odds?

A success rate is a probability, not a promise. It depends on the assumptions behind it: return forecasts, inflation, how long the plan runs. Some commentators argue Monte Carlo can overstate both the downside and the upside, because real retirees adjust when markets fall. Fair point. Treat the result as a way to compare scenarios. It isn't a prediction. The Extension Foundation's guide to Monte Carlo analysis covers the same limits.

Why the order of returns matters

Picture two retirees. Same savings, same withdrawals, same average return over 30 years. One gets a crash in year one. The other gets it in year twenty.

The first retiree is selling investments while prices are down, just to pay the bills. Those shares are gone for good and never recover. The second retiree has years of growth behind them before the crash hits. Their ending balances can be far apart.

This is called sequence-of-returns risk. It's the main reason a single-average-return calculator can mislead you. A Monte Carlo test captures it automatically, since each simulated future puts the bad years in a different place.

Fixed vs. flexible withdrawals

The 3.9% baseline assumes you take the same inflation-adjusted amount every year, whatever the market does. Most people don't spend like that. They hold back in a bad year.

Morningstar's research finds that flexible withdrawal methods, such as taking a set percentage of your current balance or using guardrails that trim spending after losses, support meaningfully higher starting withdrawal rates than the fixed approach. The trade-off is that your income moves around from year to year. (Morningstar, How New Retirees Can Spend More Without Risking Their Savings)

Ask yourself honestly: if markets fell hard in your second year of retirement, would you really cut back? If yes, flexible spending may give you more room. If no, plan around the fixed number.

The costs a basic calculator leaves out

A withdrawal rate tells you what your savings can support. It doesn't tell you what life will cost. Three items deserve their own line.

Longevity

About one in three 65-year-olds may live to at least 90, according to the Social Security Administration's planning guidance (Retirement Information for Medicare Beneficiaries, 2026). A plan that stops at 85 quietly bets against a third of retirees. The plan you build with Monte Climb runs to 95 by default, and you can push it further.

Health care

Fidelity's 2025 Retiree Health Care Cost Estimate (July 2025) puts lifetime health care costs for a single 65-year-old retiring this year at $172,500. That covers Medicare premiums, deductibles and prescriptions. It leaves out long-term care entirely. That's a real line item in your budget. For that reason, our engine charges Medicare premiums and income-based surcharges year by year instead of using one flat guess.

Required minimum distributions and taxes

You don't fully control your withdrawals from traditional retirement accounts. Required minimum distributions (RMDs) start at 73 for people born from 1951 to 1959, and at 75 for people born in 1960 or later. (Motley Fool, 3 RMD Rule Changes Retirees Must Know in 2026)

The math: divide your December 31 balance from the prior year by an IRS life-expectancy factor. At 73, that factor is 26.5. So your 2026 RMD is your December 31, 2025 balance divided by 26.5. (Carry, RMD Table) On a $500,000 traditional IRA, that comes to about $18,868.

A few practical points:

• Missing an RMD triggers an IRS penalty, so put the date on your calendar.
• Roth IRAs have no lifetime RMD for the original owner, which affects which account you draw from first.
• Withdrawals from traditional accounts are generally taxed as income. A $40,000 withdrawal doesn't mean $40,000 to spend.

Check the IRS rules or a tax professional for details on your own situation. A calculator can show you the shape of the problem. It can't file your return.

How to run your own withdrawal test

1. Start with monthly spending, not savings. This is the number most people skip. EBRI's 2025 Retirement Confidence Survey found only 52% of workers have estimated the monthly income they'll need in retirement. The other 48% are guessing.
2. Subtract guaranteed income. Take out Social Security and any pension. What's left is what your savings have to cover.
3. Run it through a Monte Carlo test with your real age and balance. Write down the success rate.
4. Change one thing at a time. Retire two years later. Spend $300 less a month. Extend the plan to 100. See which change moves your odds the most.
5. Break it on purpose. Stress-test a bad first decade, higher health care costs, or a longer life, before life does it for you.

Show your answer

When can you actually retire, and how much can you take out each year? Three numbers get you started. Enter your age, what you've saved and what you spend each month, and the Monte Climb retirement calculator runs them through 1,000 simulated futures and returns a success rate. It runs in your browser, and nothing is saved until you say so.

Then ask William, our AI planner, the follow-ups: Am I on track? Can I retire at 62? What's a sustainable spend? He shows his work.

Planning software, not advice. A probability, not a promise. But it's a much better starting point than a guess.

Show my answer →

Frequently asked questions

What is a safe withdrawal rate in retirement?

Morningstar's State of Retirement Income research (December 2025) puts the safe starting withdrawal rate at 3.9% for a 30-year retirement. That means a 90% chance money remains after 30 years, assuming 30–50% stocks and a fixed, inflation-adjusted withdrawal. Your own rate depends on your age, spending, other income and how flexible you can be.

How does a Monte Carlo retirement calculator work?

Rather than assuming one steady return, it simulates many possible futures, each with its own mix of good and bad market years and inflation. It then reports the share of those futures where your money lasts. That share is your success rate.

Is an 80% or 90% success rate good enough?

Neither is objectively right. Schwab's calculator defaults to 80% and Morningstar's 3.9% is based on 90%. A higher target gives you a bigger safety margin but means spending less now. Also look at when and how badly the plan falls short in the failed futures, not just the headline percentage.

Do I have to include RMDs in my withdrawal plan?

If you hold traditional retirement accounts, yes. RMDs start at 73 for people born 1951–1959 and at 75 for those born in 1960 or later. At 73 you divide the prior December 31 balance by 26.5. Roth IRAs have no lifetime RMD for the original owner. Check IRS guidance for your situation.

How much can I withdraw from $800,000 in retirement?

At Morningstar's 3.9% baseline, $800,000 supports a first-year withdrawal of about $31,200, or $2,600 a month, which then rises with inflation. That's a research baseline, not personal advice. Running your own numbers through a Monte Carlo test shows your actual odds.