Ready to run the numbers? Open the Safe Withdrawal Rate (SWR) Calculator in another tab and follow along.
Step 1: Gather your key numbers#
Before you can test your plan, you need to know your starting point. The better your input, the better your output.
| Input | What You Need | Tips |
|---|---|---|
| Initial Portfolio Value | Total amount of your retirement nest egg | Only count invested assets |
| Retirement Duration | How many years you're planning for (30, 40, 50 years) | Be realistic about longevity |
| Historical Period | Year range to test against | Use full history (1871-2024) for best stress test |
| Withdrawal Rate (%) | First-year withdrawal as % of portfolio | Start with 4%, adjust to your risk profile |
| Portfolio Allocation | How your money is invested | Must add up to exactly 100% |
| Annual Fees | Total expense ratio (TER) | Look up on Seeking Alpha |
| Inflation | Whether withdrawals adjust for cost of living | Always select "US Inflation" for realistic planning |
| Withdrawal Frequency | How often you'll take money out | Yearly, Semi-Annually, Quarterly, or Monthly |
My personal approach: I'm using a 3.4% withdrawal rate. This works best for me. Yours might be different. Start with 4% and gradually adjust to fit your risk tolerance.
Step 2: Run the simulation#
With your numbers in hand, this is the easy part.
Checklist:
- Double-check all inputs make sense
- Confirm portfolio allocation totals exactly 100% (label turns green)
- Click "Calculate" and let the simulator run
The calculator will test your plan against decades of historical market data.
Step 3: Understand your results#
The simulation is done. Here's how to translate the results into actionable insights, from most to least important:
Key metrics explained#
This is your headline number.
The percentage of times your plan succeeded across all historical scenarios. A higher number means more resilience.
| Success Rate | What It Means |
|---|---|
| 95%+ | Very conservative, high confidence |
| 90-95% | Strong plan, recommended target |
| 80-90% | Acceptable, but monitor closely |
| Below 80% | Consider adjusting your plan |
Ask yourself: What level of certainty do you feel comfortable with?
Your margin of safety.
In scenarios that failed, how long did your money last in the absolute worst case?
This tells you how much buffer you have before running out. If your worst duration is 25 years on a 30-year plan, you have a 5-year margin.
Worst Terminal Value:
- If $0 → Failures occurred in some scenarios
- If positive → Your portfolio survived every single scenario
Median Terminal Value:
- Your middle outcome
- Realistic expectation, avoiding best/worst extremes
- Often surprisingly high with conservative withdrawal rates
What to do next#
Not happy with the success rate?
Go back to Step 1 and try a slightly lower withdrawal rate. You'll be amazed at how much a small change can improve your odds.
| Withdrawal Rate | Typical Success Rate (30 years) |
|---|---|
| 4.0% | ~95% |
| 3.5% | ~98% |
| 3.0% | ~99%+ |
Use this checklist anytime you want to test a new assumption or track your progress toward a secure retirement.
Related resources#
Dive Deeper:
- SWR Calculator - Run the simulation yourself
- How to Use the SWR Calculator: A Practical Guide - Full methodology walkthrough
- FIRE Calculator - Calculate your financial independence number
Questions or feedback? Drop me a comment below with what features you'd like to see in future SWR calculator updates!
