FinSmart calculation guide
Limits of withdrawal-rate targets.
The FinSmart target divides annual spending by a selected withdrawal rate. It is useful for seeing how the rate changes the target, but it does not simulate a full retirement plan.
The formula
target portfolio = monthly spending × 12 ÷ withdrawal rate
Why 4% is not a promise
A 4% rate is a widely discussed historical starting assumption based on specific markets, portfolios and retirement periods. Different returns, inflation, taxes, fees and lifespans can change the result.
Sequence-of-returns risk
Poor returns early in retirement can be more damaging than the same average returns arriving later, because withdrawals reduce the capital available for recovery.
Better scenario use
- Test several spending levels.
- Compare multiple withdrawal rates.
- Model tax and health costs separately.
- Revisit the target as circumstances change.
Open the target calculator · Read the methodology
Not retirement advice. A simple target cannot establish whether a portfolio will last.