A $7,000 spending target can require a larger withdrawal
If you choose a hypothetical 20% effective tax allowance on the withdrawal, $8,750 must leave the account to leave $7,000 for spending. The remaining $1,750 is the allowance. The calculator does not determine that tax rate.
Gross up the spending target once
The arithmetic is spendable cash divided by one minus the chosen tax fraction: $7,000 ÷ 0.80 = $8,750. Adding 20% to $7,000 would give $8,400, which leaves only $6,720 after that same 20% allowance. The percentage’s base matters.
Green is spending; brass is the chosen allowance. The 10% and 20% are examples, not tax rates determined by this site.
What the portfolio must actually pay
The rows are gross cash leaving the account. An assumed tax reserve is included in that draw, rather than charged again by the model.
| Monthly draw | 0% real | 1% real | 3% real |
|---|---|---|---|
| $7,000 | 23y 10m | 27y 3m | 41y 4m |
| $8,000 | 20y 10m | 23y 5m | 32y 6m |
| $10,000 | 16y 8m | 18y 3m | 23y 0m |
Final dates include a partial payment when needed. “No depletion” assumes the stated constant growth continues.
A flat dollar allowance is another budget choice
Alternatively, setting aside $1,000 for tax alongside $7,000 of spending requires an $8,000 withdrawal. At zero growth, $2 million supports 250 such monthly payments. A $10,000 draw would support 200 payments. These are cash-flow comparisons, not tax-return calculations.
Keep tax assumptions tied to the account and year
A chosen effective withdrawal allowance is not automatically a marginal federal bracket. This page does not model basis, deductions, state tax, credits or qualified Roth distribution status. Use a verified tax estimate when setting the actual withdrawal, and avoid charging the same allowance again as a separate expense.
Questions about this calculation
Can I retire on $2 million and spend $7,000 a month?
The portfolio may need to supply more than the spending amount once other cash outflows are included. The examples compare $7,000 of spending with explicitly chosen tax allowances; they do not determine whether your full retirement plan is funded.
Is 20% the tax rate on my retirement withdrawals?
No. The 20% is a hypothetical effective allowance used to demonstrate gross-up arithmetic. Actual tax treatment depends on the account, taxable amounts and applicable rules.
Should I subtract the tax allowance from the result again?
No. If the entered monthly draw already includes spending plus a tax allowance, the balance projection has already removed both. Subtracting it again would count the same cash outflow twice.
Check the assumptions
Original scenarios, reviewed October 25, 2026. Monthly calculation method. Return, income and expense amounts are assumptions; no market forecast or personal recommendation is made.