Retirement Drawdown Lab
Saving is only half the game — spending it down is the other half. Pick your numbers, and watch three withdrawal strategies fight it out on the same portfolio: which one lasts, which one pays the most, and which one adapts.
Your inputs
Retirement details
Portfolio balance by strategy
Snapshot every 5 years
| Year | 4% rule bal. | 4% rule wdraw. | Fixed % bal. | Fixed % wdraw. | Guardrails bal. | Guardrails wdraw. |
|---|
Required minimum distributions
—
| Age | IRS divisor | RMD | Balance after |
|---|
Simplified: your traditional balance grows untouched at the expected return until 73, then RMDs are taken yearly. Real RMDs use the prior year-end balance and interact with your withdrawals.
Social Security timing
Assumes full retirement age 67 (born 1960 or later) and ignores COLAs — the percentages are what matter.
What is drawdown?
Drawdown is the spending phase: the decades where you stop adding to the portfolio and start living off it. Accumulation rewards patience; drawdown punishes rigidity. The question shifts from "how fast can it grow?" to "how much can I take each year without the money dying before I do?"
Why the order of returns matters more than the average
This is sequence-of-returns risk, and it's the cruelest math in retirement. Take two retirees with $500,000 each, both withdrawing $35,000 a year, both averaging exactly 0% over two years — but in opposite order. Retiree A gets +25% then −20%: ($500k − $35k) × 1.25 = $581,250, then ($581,250 − $35k) × 0.80 = $437,000. Retiree B gets −20% then +25%: ($500k − $35k) × 0.80 = $372,000, then ($372k − $35k) × 1.25 = $421,250. Same average return, same withdrawals — B ends up about $16,000 poorer, because the loss landed while the portfolio was biggest and the withdrawals kept coming. Early bad years in retirement are far more dangerous than late ones.
The three strategies
1. The 4% rule (inflation-adjusted). Withdraw your spending amount in year one, then raise it by inflation every year, rain or shine. Simple, predictable income — but blind to what the portfolio is doing. From the 1994 Trinity study; it survived most historical 30-year periods, not all of them.
2. Fixed percentage. Withdraw a fixed slice (default 4%) of whatever the portfolio is worth each year. Mathematically it can never run dry — the withdrawal shrinks with the portfolio. The price is income volatility: your "paycheck" falls in down years.
3. Guardrails. A simplified take on the Guyton-Klinger decision rules: start inflation-adjusted like the 4% rule, but each year check the withdrawal rate (this year's withdrawal ÷ portfolio). Above 6%? Cut spending 10% that year, no inflation bump. Below 4%? Raise it 10% on top of inflation. Between the rails, just take the inflation bump. The real Guyton-Klinger method has extra capital-preservation and prosperity rules; this lab keeps the core idea — automatic course correction — in a form you can see working year by year.
The math behind this lab
Pt+1 = (Pt − Wt) × (1 + r)
4% rule: Wt = spend × (1 + infl)t−1
Fixed %: Wt = pct × Pt
Guardrails: W1 = spend; then inflation-adjust, but cut 10% (no inflation bump) if Wt/Pt > 6%, raise 10% if < 4%
A strategy "runs dry" in the first year its withdrawal exceeds the portfolio. "Lasts N years" means N years of fully funded withdrawals.
Required minimum distributions (RMDs)
Under SECURE 2.0, RMDs begin at 73 (rising to 75 for anyone who turns 73 after 2032). Each year you divide the prior year-end traditional balance by the IRS Uniform Lifetime Table divisor for your age — 26.5 at 73 (about 3.8% of the balance), 20.2 at 80, 12.2 at 90. The divisor shrinks as you age, so the forced percentage climbs every year, and every dollar comes out taxed as ordinary income. This lab simplifies: your traditional balance grows untouched at the expected return until 73, then RMDs are taken yearly. Notice the table above — at a 6% return the balance can keep growing even while RMDs are being taken, which is exactly why large traditional balances create a "tax time bomb" in your 80s.
When to claim Social Security
Your PIA — the monthly benefit at full retirement age (67 for anyone born in 1960 or later) — is just the starting point. Claim at 62 and you get 70% of it for life; wait until 70 and delayed retirement credits (8% per year past 67) lift it to 124%. The breakeven math falls out of those percentages: claiming at 70 beats 62 only if you live past about 80, and beats 67 past about 82. There's no single right answer — health, other income, and whether you need the money now all matter — but the percentages are fixed by law, so the tradeoff above is knowable, not guesswork.
The Roth conversion window
Between retirement and 73, many people sit in their lowest-income years: no paycheck, no RMDs yet, no Social Security (if delayed). That's the window to convert traditional dollars to Roth — pay tax now at a known low rate instead of later at unknown rates on top of RMDs. The tradeoff is real money today for flexibility tomorrow, and each converted dollar counts as income that year (large conversions can also trip Medicare IRMAA surcharges). This lab's conversion math is deliberately illustrative — it doesn't model tax brackets. Run any real conversion plan past a tax advisor.
Honest caveats
- Constant returns are a simplification. Real markets lurch. This lab holds returns steady on purpose — so strategy differences, not luck, drive the results. Then take your winner to the Monte Carlo simulator to see it across 1,000 volatile histories.
- Taxes and fees are ignored. Withdrawals from a traditional IRA/401(k) are taxed as income; a 1% advisor fee is a 1% drag on the return input. Adjust the return down or the spending up to approximate them.
- Withdrawal timing is simplified. The lab withdraws once a year at the start; real retirees draw monthly, which slightly changes the math.
Strategy research: Investopedia — the 4% rule; Kitces — Guyton-Klinger guardrails. RMD rules: Fidelity — IRS Uniform Lifetime Table (Pub. 590-B, Table III). Social Security: AARP — claiming at 62 vs 67 vs 70.