How much can I safely withdraw from $500,000?
At a 4% withdrawal rate, $500,000 provides about $20,000 in the first year — roughly $1,667 a month — rising with inflation, and the balance lasts about 34 years under these assumptions (4.5% return, 2.5% inflation). A cautious 3.5% rate gives about $17,500 a year that stretches further; a 5% rate gives about $25,000 but depletes the balance sooner.
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34.3 years
Under these assumptions.
$20,000
In today's dollars.
Assumptions behind this number
- 4% initial withdrawal rate; the dollar amount rises with inflation to hold buying power.
- 4.5% nominal expected return; 2.5% inflation → about 2% real growth.
- Withdrawals taken monthly, before taxes and before any Social Security or pension.
- No taxes, fees, market crashes, or spending changes modelled. Change any value above.
Why the number comes out this way
This is the mirror image of asking how big a portfolio you need: here the pot is fixed at $500,000 and the withdrawal rate decides the income. Income is simply the rate times the balance — 4% of $500,000 is $20,000 a year, or about $1,667 a month — and the model raises that dollar figure each year so its buying power holds as prices rise.
How long $500,000 lasts is set by the gap between the withdrawal rate and the portfolio's real return, not by the size of the pot. At a 4% withdrawal against roughly 2% real growth, the balance is drawn down faster than it grows and depletes in about 34 years — close to the 30-year horizon the 4% rule is built around. Drop to 3.5% and the same $500,000 stretches noticeably longer; push to 5% and it runs down sooner. That is why a smaller portfolio can still fund a long retirement at a modest rate.
The smooth-return model hides a real risk: markets deliver returns in a jagged order, and a run of poor early years — sequence-of-returns risk — can shorten how long the money lasts well below the average-return estimate. Social Security or a pension pushes the other way, covering part of your spending so the $500,000 has to do less. Treat the ~$20,000 figure as an assumption-driven benchmark and model your own case above.
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Frequently asked questions
How much can I withdraw from $500,000 a year?
About $20,000 in the first year at a 4% withdrawal rate — roughly $1,667 a month — rising with inflation, under these assumptions. A 3.5% rate gives about $17,500; a 5% rate about $25,000.
How long will $500,000 last in retirement?
About 34 years at a 4% inflation-adjusted withdrawal with a 4.5% return, under these assumptions. A lower withdrawal rate makes it last longer; a higher one depletes it sooner.
Is $500,000 enough to retire on?
That depends on your spending, taxes, and other income like Social Security. $500,000 on its own produces about $20,000 a year at 4%; combined with other income it can cover more. This is a projection under stated assumptions, not advice.
Are the withdrawals adjusted for inflation?
Yes. The dollar amount rises each year to keep its buying power roughly constant, so $20,000 stays worth about $20,000 in today's money rather than being eroded by rising prices.
Educational use only
Educational purposes only. Calculator results are estimates based on assumptions and user inputs. They are not financial, investment, legal, or tax advice. Investing involves risk, including possible loss of principal. Past performance does not guarantee future results.