Retirement Income Calculator: How Much Monthly Income Will Your Portfolio Generate?

The most common retirement question is not "how much do I have?" It's "how much can I spend per month?" These are related but different. The answer depends on your portfolio size, withdrawal rate, and other income sources.

The 4% Rule

The 4% rule comes from the 1994 Trinity Study, updated multiple times since. It says you can withdraw 4% of your portfolio in year 1, adjust for inflation each year, and have a very high probability of your money lasting 30 years across historical market scenarios.

Annual income = Portfolio x 0.04 Monthly income = Portfolio x 0.04 / 12

For $1,000,000:

• Annual income: $40,000
• Monthly income: $3,333

This is the baseline. Whether it's enough depends entirely on your expenses.

Portfolio Size to Monthly Income Table

Here's monthly income at three different withdrawal rates:

| Portfolio Size | 3% Withdrawal | 4% Withdrawal | 5% Withdrawal | |---------------|---------------|---------------|---------------| | $500,000 | $1,250 | $1,667 | $2,083 | | $750,000 | $1,875 | $2,500 | $3,125 | | $1,000,000 | $2,500 | $3,333 | $4,167 | | $1,500,000 | $3,750 | $5,000 | $6,250 | | $2,000,000 | $5,000 | $6,667 | $8,333 | | $3,000,000 | $7,500 | $10,000 | $12,500 |

3% withdrawal: Very conservative. High probability of leaving significant assets behind. Good if you expect a long retirement (35+ years) or want to leave money to heirs.

4% withdrawal: The standard planning rate. Based on historical data showing ~95% success rate over 30-year periods.

5% withdrawal: Higher risk. Based on historical data, this rate fails in roughly 15-20% of 30-year scenarios, particularly those starting in bad market years.

How Much Portfolio Do You Need?

Flip the math. If you know your monthly spending, calculate the target:

Portfolio target = Monthly spending x 12 / Withdrawal rate

Examples at 4% withdrawal:

| Monthly Spending Need | Portfolio Required | |----------------------|-------------------| | $2,000/month | $600,000 | | $3,000/month | $900,000 | | $4,000/month | $1,200,000 | | $5,000/month | $1,500,000 | | $7,000/month | $2,100,000 | | $10,000/month | $3,000,000 |

Social Security Reduces the Portfolio Requirement

This is the most important adjustment most retirement calculators miss. Social Security is guaranteed income for life, inflation-adjusted. Every dollar of Social Security you receive is a dollar your portfolio doesn't need to generate.

Average Social Security benefit (2026): ~$1,907/month. Maximum at full retirement age: ~$3,822/month.

If your household expects $3,000/month in combined Social Security starting at 67, and your retirement spending target is $6,000/month, you only need your portfolio to cover $3,000/month.

Portfolio needed at 4% to cover $3,000/month = $900,000

Without Social Security factored in, you'd calculate a need for $1,800,000 (4% x $6,000/month target). That's a $900,000 difference in how much you need to save.

Social Security Offset by Portfolio Size

| Portfolio | SS Income | Total Monthly Income (4% rule) | |-----------|----------|-------------------------------| | $500,000 | $2,000 | $3,667 | | $750,000 | $2,000 | $4,500 | | $1,000,000 | $2,000 | $5,333 | | $1,500,000 | $2,000 | $7,000 | | $2,000,000 | $2,000 | $8,667 |

This table assumes a single person with $2,000/month Social Security starting at 67. A married couple with dual Social Security income looks even better.

The Sequence of Returns Risk

The 4% rule assumes average returns, but the order of returns matters enormously. Retiring into a bear market (2000, 2008, 2022) while drawing down the portfolio is far more damaging than experiencing the same average returns in a different order.

Mitigation strategies:

• Keep 1-2 years of expenses in cash or short-term bonds
• Have a flexible spending plan (reduce withdrawals in down years)
• Delay Social Security to 70 for maximum guaranteed income
• Consider partial annuitization for a guaranteed income floor

Delaying Social Security Pays Off

Every year you delay Social Security from 62 to 70, benefits increase by 6-8%.

• At 62: reduced benefit (25-30% less than full retirement age)
• At 67 (FRA for those born 1960+): 100% of earned benefit
• At 70: 124% of full retirement age benefit

Delaying from 67 to 70 increases lifetime benefits by 24%. If your full benefit is $2,500/month, waiting to 70 gets you $3,100/month. Over a 20-year retirement, that's an extra $144,000.

Run the Numbers

Use the FIRE Calculator to model your specific portfolio, expected Social Security, monthly spending needs, and withdrawal rate. See exactly how long your money lasts under different scenarios.