Retirement Withdrawal Calculator

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Retirement Withdrawal Calculator

This retirement drawdown calculator is a tool that helps individuals estimate their income needs during retirement. The calculator provides personalized projections by inputting factors like current savings, desired retirement age, taxes, early withdrawal penalties, and expected rate of return. This allows users to make informed decisions about how much they should save and withdraw to maintain their desired lifestyle in retirement. This tool applies to 401k, IRA, 457, TSP and 403b retirement plans.

Retirement Withdrawal Calculator For 401K, 403B,Tsp, And Ira

How to Make Withdrawals Last A Lifetime

The most efficient retirement withdrawal calculator uses an annuity to withdraw instead of a traditional drawdown approach. Annuities are the only retirement vehicle that guarantees withdrawals for the rest of your life, including after your retirement account balance dwindles to zero.

Note: You can purchase an annuity (with no IRS penalties) with your retirement accounts, investments, and cash.

Retirement Drawdown Calculator

Early Withdrawal Penalties

The early withdrawal penalty for most retirement accounts, such as IRAs and 401(k)s, in the United States is typically 10%. This penalty is applied to withdrawals made before the age of 59½. In addition to the penalty, the amount withdrawn is usually subject to regular income tax. There are some exceptions to this penalty, depending on the type of retirement account and the specific circumstances of the withdrawal.

Related Tool: Taxes And Penalties On Retirement Withdrawals Calculator

Early Withdrawal Penalty Exceptions

This table covers the standard early withdrawal penalty and exceptions for retirement accounts like IRAs and 401(k)s.

Withdrawal before age 59½10% penalty + income tax
Medical expenses exceeding 7.5% of AGIPenalty waived, income tax applies
First-time home purchasePenalty waived up to $10,000, income tax applies
Higher education expensesPenalty waived, income tax applies
DisabilityPenalty waived, income tax applies
DeathPenalty waived, income tax applies
Substantially equal periodic payments (SEPP)Penalty waived, income tax applies
Safe Withdrawal Rate Calculator

Safe Withdrawal Rate

The safe withdrawal rate is a financial concept that refers to the percentage of retirement savings a person can withdraw each year without running out of money. It is generally recommended to be around 4% of the initial portfolio value. This rate is designed to balance income needs with the longevity of the funds.

Safe Withdrawal Rate By Age

Age at RetirementSafe Withdrawal Rate

This table is based on a general guideline that the older you are when you retire, the higher the safe withdrawal rate can be. This is because a shorter retirement period means less time for your assets to be depleted.

How We Can Help

At The Annuity Expert, we understand the challenges and uncertainties of planning for retirement. Our primary goal is to help you achieve a financially secure retirement by offering tailored solutions that fit your unique needs. With over 15 years of experience as an insurance agency, annuity broker, and retirement planner, we have the expertise to guide you through the complexities of retirement planning.

Understanding Your Concerns

We recognize the core problem many retirees face: the fear of outliving their savings. This fear can lead to anxiety, sleepless nights, and a reluctance to enjoy your retirement fully. We are committed to helping you overcome these worries by providing strategies that ensure a steady income stream throughout your retirement.

Our Commitment

We believe in finding the best solutions at the lowest costs. Our mission is to offer you peace of mind by managing your retirement funds efficiently and effectively. Whether it’s maximizing the benefits of your annuities or advising on the best withdrawal strategies, we are here to help.

What We Recommend

Step 1: Initial Consultation

  • The first step is to contact us for a free consultation. During this meeting, we’ll review your current financial situation, discuss your retirement goals, and identify any concerns you may have.
  • Main Benefit: You’ll clearly understand where you stand financially and what steps are needed to achieve your retirement goals.

Step 2: Customized Retirement Plan

  • Based on the information gathered during the consultation, we will create a customized retirement plan tailored to your specific needs. This plan will outline the optimal strategies for withdrawing funds, managing investments, and utilizing annuities to ensure a steady income.
  • Main Benefit: You receive a detailed, actionable plan designed to maximize your retirement income and minimize risks.

Step 3: Ongoing Support and Adjustments

  • We don’t just set you up and leave you to fend for yourself. We’ll provide ongoing support and regularly review your plan to adjust for any changes in your circumstances or the financial market.
  • Main Benefit: Continuous support ensures your retirement strategy remains effective and up-to-date, giving you peace of mind.

Features and Benefits

  • Personalized Advice: Tailored solutions to fit your unique financial situation.
  • Expert Guidance: Professional advice from experienced retirement planners.
  • Regular Reviews: Ongoing support and adjustments to keep your plan on track.
  • Cost-Effective Solutions: Finding the best strategies at the lowest costs.

Addressing Common Objections

Some may worry about the costs associated with professional retirement planning. However, the value of a well-structured retirement plan far outweighs the initial investment. Not working with us can lead to financial missteps, such as outliving your savings or paying unnecessary taxes, resulting in a stressful and unstable retirement.

By working with us, you will experience financial stability, a steady income stream, and the confidence to enjoy your retirement without the constant worry of running out of money. You’ll feel secure knowing you have a professional team supporting you every step of the way.

Best Retirement Withdrawal Calculator

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Questions From Our Readers

How much tax will be taken out of my 401k withdrawal?

The tax on a 401k withdrawal depends on your current income tax bracket. Withdrawals are taxed as ordinary income. Additionally, if you’re under 59½, there might be a 10% early withdrawal penalty unless you qualify for an exception.

How much will I get if I cash out my 401k?

The amount you’ll receive from cashing out your 401k depends on your account balance, age, tax bracket, and potential penalties for early withdrawal.

How much can I withdraw from my 401k after 59 1/2?

After reaching the age of 59 1/2, individuals can withdraw as much as they want from their 401k without facing any penalty. However, they will still be subject to income tax on the withdrawn amount.

What is the tax rate for withdrawing from a 401k after 59 1/2?

The tax rate for withdrawing from a 401k after 59 1/2 depends on the individual’s tax bracket. The amount withdrawn is considered taxable income, subject to federal and state income tax rates.

When can you withdraw from a 401k?

You can withdraw from a 401(k) plan after reaching age 59½ or experiencing certain qualifying events like permanent disability or financial hardship. However, early withdrawals before age 59½ may incur penalties and taxes.

At what age is a 401k withdrawal tax-free?

401k withdrawals are not tax-free at any age. Withdrawals are taxed as ordinary income. However, you can avoid the 10% early withdrawal penalty if you are 59½ or older or meet certain conditions.

When can you cash out an IRA?

You can start taking distributions from your traditional IRA penalty-free at age 59½. However, if you withdraw funds before this age, you may be subject to a 10% early withdrawal penalty unless you qualify for an exception.

How much tax do you pay on 403b withdrawal?

The tax on a 403b withdrawal depends on your income tax bracket in the year of withdrawal. Withdrawals are taxed as ordinary income. If you’re under 59½, there may also be a 10% early withdrawal penalty unless you qualify for an exception.

How long does it take to get money from 403b?

The time to receive funds from a 403b withdrawal varies by provider and circumstances. It typically takes a few days to a few weeks. Sometimes, processing and distribution can be quicker or slower, depending on specific plan rules and procedures.

When can I withdraw from my 403b without paying taxes?

You cannot withdraw from your 403b without paying taxes, as withdrawals are taxed as ordinary income. However, you can avoid the 10% early withdrawal penalty if you are 59½ or older or meet certain exceptions like disability or financial hardship.

What is a safe withdrawal rate?

A safe withdrawal rate is the percentage of your retirement savings you can withdraw annually without significantly risking running out of money. Based on historical market performance, the commonly suggested rate is around 4%, adjusted for inflation.

When do I pay the 10% early withdrawal penalty?

You pay the 10% early withdrawal penalty on 401k or IRA distributions if you withdraw funds before age 59½ unless you qualify for an exception. You pay the IRS the 10% early withdrawal penalty when you file your annual tax return for the year you took the early distribution. The penalty is included in your overall tax liability on that year’s return.

What is the tax rate on 401k after 65?

The tax rate on a 401k after 65 depends on the type of distribution taken. If one withdraws funds as ordinary income, the distribution will be subject to their tax rate. However, if funds are withdrawn as a qualified Roth distribution, they may be tax-free. It is advisable to consult a tax professional for personalized guidance.

Can you withdraw funds on a monthly basis from my retirement accounts once you turn 59 1/2?

Yes, once you reach the age of 59 1/2, you can typically start withdrawing funds from your retirement accounts on a monthly basis without incurring the 10% early withdrawal penalty that applies to withdrawals made before this age. An annuity’s Guaranteed Lifetime Withdrawal feature can provide a structured way to automate these withdrawals, ensuring a steady income stream for the rest of your lifetime.

What is the maximum withdrawal from a 401K?

The maximum withdrawal from a 401(k) depends on several factors, including your age, the balance in your account, and the rules of your specific 401(k) plan. Importantly, there is no legal maximum withdrawal limit. Instead, withdrawals are typically guided by your financial needs and retirement strategy.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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