Middle Class Wealthy
Retirement & Gift Planning Simulator
A few years ago I sat across from a Schwab "Wealth Advisor" with my mother, trying to build a picture of whether her savings would last her lifetime — and what she might leave behind. We left with a brochure and a promise to follow up. The follow-up never came.
She wasn't poor, but she wasn't a priority. With hundreds of clients in his book, a $1+ million portfolio wasn't going to move his business. The uncomfortable truth is that the financial advisory industry is built to serve the very wealthy first. Everyone else gets a number to call.
This simulator is what I built instead. It's not a replacement for a fiduciary advisor. Rather, it lets you see the numbers, stress-test scenarios and let you and your family consider the most important financial factors of the second half of life.
- Projects portfolio value year-by-year from today through end of life
- Models three spending phases: working years, retirement, and long-term care
- Tracks withdrawal rate (WR) against age-appropriate safe limits
- Compares a gifting scenario against a no-gift baseline side by side
- Estimates the inheritance remaining at life expectancy
- A licensed fiduciary advisor who knows your full picture
- Tax planning — Roth conversions, RMDs, capital gains sequencing
- Social Security optimization and claiming strategy
- Estate planning, trusts, or beneficiary structuring
- Investment allocation, asset class selection, or rebalancing
- Insurance analysis — life, long-term care, or annuities
Simulation Assumptions
What is a Withdrawal Rate?
The withdrawal rate (WR) is the percentage of your portfolio you draw down in a given year to cover all expenses — spending, taxes, long-term care, and gifts. A WR of 5% on a $1M portfolio means $50,000 is leaving the portfolio that year. The lower the rate, the more likely your portfolio survives a full retirement horizon.
The Academic Foundation
William Bengen (1994) was the first to rigorously quantify safe withdrawal rates using historical US market data. By testing every 30-year rolling period from 1926–1992, he found that a retiree starting at age 65 with a 50/50 stock/bond portfolio could withdraw 4% in year one — inflation-adjusted each year thereafter — and never run out of money in any historical scenario. This became known as the "4% rule."[1]
The Trinity Study (Cooley, Hubbard & Walz, 1998; updated 2011) expanded this with probability-of-success analysis across different time horizons and asset allocations. Their core finding reinforced the 4% floor for 30-year horizons, but showed that shorter horizons support higher rates — a 15-year horizon, for example, historically supports 6–8%+ with high confidence.[2]
Pfau & Kitces (2012–present) have challenged the original 4% rule in today's low-return, high-valuation environment, suggesting 3–3.5% may be more appropriate for early retirees. However, they also note that dynamic spending strategies — reducing withdrawals in down markets — can recover much of that headroom.[3][4]
Age-Based Limits Used in This Simulator
Rather than a single static rate, this simulator applies limits that step up as you age — reflecting the shorter remaining horizon and the actuarial reality that spending often declines in later retirement. These limits are grounded in the horizon-based research from Bengen and Trinity, adapted for practical use:
| Remaining Years | WR Limit | Research Basis |
|---|---|---|
| > 35 years | 3.5% | Pfau's updated guidance for very long horizons in low-return environments |
| 31–35 years | 4.0% | Bengen (1994) original 4% rule — the safe floor across all historical 30-year periods |
| 26–30 years | 5.0% | Trinity Study: high success rates for 25–30 year horizons with balanced allocation |
| 21–25 years | 6.0% | Trinity Study: 6–7% supported in 20–25 year horizons with 60/40 allocation |
| 16–20 years | 7.0% | Trinity Study: 7–8% historically succeeded in 15–20 year horizons |
| 11–15 years | 9.0% | Trinity Study: 9%+ supported in shorter horizons; sequence risk significantly reduced |
| 6–10 years | 11.0% | Short remaining horizon with high historical success rates; LTC costs typically dominate |
| > 5 years, ≤ 10 | 13.0% | Very short horizon; portfolio drawdown expected, estate planning considerations dominate |
| ≤ 5 years | 15.0% | Terminal horizon; full portfolio utilisation appropriate; inheritance planning primary concern |
Key Caveats
The limits also do not account for income flooring strategies (e.g., annuitizing a portion of assets to cover fixed expenses), which can significantly raise the sustainable withdrawal rate on the remainder of the portfolio.
References
- [1]Bengen, W.P. (1994). "Determining Withdrawal Rates Using Historical Data." Journal of Financial Planning, 7(4), 171–180. The paper that established the 4% rule. View abstract →
- [2]Cooley, P.L., Hubbard, C.M., & Walz, D.T. (1998, updated 2011). "Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable." AAII Journal. The "Trinity Study" — probability-of-success analysis across horizons and allocations. View article →
- [3]Pfau, W.D. (2012). "Capital Market Expectations, Asset Allocation, and Safe Withdrawal Rates." Journal of Financial Planning. Argues 4% may be too high for today's environment. View article →
- [4]Kitces, M. & Pfau, W.D. (2015). "Retirement Risk, Rising Equity Glidepaths, and Valuation-Based Asset Allocation." Journal of Financial Planning. On dynamic withdrawal strategies. Read on Kitces.com →
Each chart plots portfolio value and Withdrawal Rate (WR) over the life expectancy. The red shaded zone (if applicable) marks years where WR exceeds the age-based WR limit — see Methodology & Research. Hover over the chart for exact WR and WR limit at each age.
Beginning portfolio value, spending, LTC costs, investment growth, and ending balance for each year of retirement.
| Age | Beginning Value | Income | Annual Spend | LTC Cost | Gift | Portfolio Growth | Ending Value | Withdrawal Rate |
|---|---|---|---|---|---|---|---|---|
| Totals | — | — | — | — | — | — | — | — |