How long will $3 million last in retirement?

Withdrawing $10,000 a month (4% of $3,000,000 in the first year), raised 2.5% a year, with a constant 5% annual return, the money lasts 39.8 years. At 5% of the portfolio ($12,500 a month) it lasts 28.0 years.

The return assumption changes the answer most at higher spending. $15,000 a month rising 2.5% a year lasts 17.5 years at a 3% return and 31.2 years at 7%.

Returns are constant assumptions, not forecasts. Withdrawals are before tax. Change any input in the calculator.

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Notes and methodology

How long it lasts by monthly withdrawal

Years until $3,000,000 runs out, with the first withdrawal rising 2.5% a year after that. Read across for the return, down for the spending.

Years $3,000,000 lasts, withdrawals rising 2.5% a year, constant annual return
First withdrawal	3% return	4% return	5% return	6% return	7% return
$8,000 a month3.2% of the portfolio a year	34.3 years	42.7 years	50+ years	50+ years	50+ years
$10,000 a month4% of the portfolio a year	26.9 years	31.6 years	39.8 years	50+ years	50+ years
$12,000 a month4.8% of the portfolio a year	22.2 years	25.2 years	29.8 years	37.8 years	50+ years
$15,000 a month6% of the portfolio a year	17.5 years	19.3 years	21.8 years	25.3 years	31.2 years
$20,000 a month8% of the portfolio a year	13.0 years	13.9 years	15.1 years	16.6 years	18.6 years
$25,000 a month10% of the portfolio a year	10.3 years	10.9 years	11.6 years	12.4 years	13.4 years

Each month the balance earns the annual return divided by 12, then the withdrawal is taken. "Rising" withdrawals grow 2.5% a year to keep pace with an assumed inflation rate; "flat" withdrawals stay the same dollar amount. Runways longer than 50 years are shown as 50+.

Income at 3%, 4% and 5% withdrawal rates

First-year income from $3,000,000 and how long it lasts at a 5% return, rising 2.5% a year
Initial rate	Per year	Per month	Lasts
3%	$90,000	$7,500	50+ years
4%	$120,000	$10,000	39.8 years
5%	$150,000	$12,500	28.0 years

A withdrawal rate is the first year's withdrawal divided by the starting balance. The runway for a given rate is the same at any portfolio size; the dollar income is what changes.

Flat or inflation-adjusted withdrawals

Keeping the withdrawal flat stretches the money but lets inflation erode what it buys; raising it 2.5% a year keeps spending power and shortens the runway.

Years $3,000,000 lasts at a constant 5% return
First withdrawal	Flat	Rising 2.5% a year
$8,000 a month	50+ years	50+ years
$10,000 a month	50+ years	39.8 years
$12,000 a month	50+ years	29.8 years
$15,000 a month	35.9 years	21.8 years
$20,000 a month	19.7 years	15.1 years
$25,000 a month	13.9 years	11.6 years

Withdrawal that lasts exactly 30 years

First monthly withdrawal that takes $3,000,000 to zero in 30 years
Return	Rising 2.5% a year	Flat
3%	$9,030	$12,648
4%	$10,411	$14,322
5%	$11,914	$16,105
6%	$13,534	$17,987
7%	$15,266	$19,959

These spend the whole balance by the end of year 30 and leave nothing for a longer life or a bad early market.

Where the 4% rule comes from

The "4% rule" comes from William Bengen's October 1994 article in the Journal of Financial Planning. Using historical US stock and bond returns and inflation, he concluded that a first-year withdrawal of 4% of the portfolio, raised for inflation each year after, should be safe for at least 30 years. It describes past US market history, not a guarantee. In this constant-return model, $10,000 a month rising 2.5% a year lasts 26.9 years at a 3% return, 39.8 years at 5% and 50+ years at 7%. Bengen's result came from actual year-by-year returns, including poor early years, which a constant return cannot show.

Assumptions

Returns are constant, so sequence-of-returns risk (poor returns early in retirement) is not modeled; real portfolios with the same average return can run out sooner. Taxes on withdrawals, investment fees, Social Security, pensions and required minimum distributions are also excluded. Withdrawals here are amounts taken from the portfolio, before tax.
Returns from 3% to 7% are an illustrative spread, not expected returns for any portfolio.
Figures are rounded to whole dollars and one decimal of a year.

Questions

Is 3 million enough to retire?

At a 5% return with 2.5% yearly increases, $10,000 a month lasts 39.8 years, $15,000 lasts 21.8 years and $20,000 lasts 15.1 years. The 4% rule gives $10,000 a month.