What does the wealth decay risk analyzer measure?

The tool estimates how your portfolio might evolve over time under constant withdrawals and returns. It shows whether your wealth is likely to last for the modeled horizon and provides a simple decay risk score based on your withdrawal rate relative to expected returns.

Is this a full Monte Carlo simulation?

No. The analyzer uses deterministic annual compounding with constant withdrawals and returns. It does not simulate random market paths. You can still use it to understand directional risk and sensitivity to your assumptions.

How should I choose my expected return?

Use a realistic long-term net return that reflects your asset allocation and expected fees. Many people run conservative, base, and optimistic scenarios to see how decay risk changes across different assumptions.

What is the decay risk score?

The decay risk score is a simple index based on your withdrawal rate relative to expected returns and the modeled horizon. Higher scores indicate a greater chance that your wealth could be depleted or significantly eroded over time.

Does the tool account for taxes or sequence of returns risk?

No. The tool uses a single net return rate and does not model taxes or the order of market gains and losses. You can adjust your expected return downward to approximate these effects, but the results remain simplified.

Can I export the decay schedule?

Yes. Use the Export CSV button to download a year-by-year schedule of starting balance, withdrawals, growth, ending balance, and inflation-adjusted ending balance. You can analyze it further or share it with an advisor.

Wealth Decay Risk Analyzer

Estimate how long your portfolio may last under different withdrawal rates, returns, and inflation. This tool builds a year-by-year schedule and a simple decay risk score so you can see whether your current spending plan is likely to preserve or erode your wealth over time.

Starting portfolio value Annual withdrawal amount Analysis horizon (years)

Expected annual return (%) Inflation rate (%) Withdrawal timing

Scenario label (optional) Target longevity (years) Highlight metric

Tip: Run conservative, base, and optimistic scenarios to see how sensitive your plan is to market returns and spending choices.

Important: This analyzer uses simplified annual compounding with constant withdrawals and returns. Real-world outcomes will differ due to market volatility, taxes, fees, and changes in your spending. Use this tool for planning and scenario exploration, not as a guarantee or personalized advice.

Wealth decay formulas

The wealth decay risk analyzer uses a small set of formulas to model how your portfolio might change over time when you withdraw a fixed amount each year. These formulas are intentionally simple, but they capture the core tension between spending and growth.

1. Annual compounding with withdrawals

Starting wealth (Year 0) =
  User-entered starting portfolio value

Annual withdrawal =
  User-entered withdrawal amount

Return rate (decimal) =
  Expected annual return (%) ÷ 100

For each year t:

If withdrawals at start of year:
  StartBalance_t = max(0, EndBalance_(t − 1) − Annual withdrawal)
  Growth_t = StartBalance_t × Return rate
  EndBalance_t = StartBalance_t + Growth_t

If withdrawals at end of year:
  StartBalance_t = EndBalance_(t − 1)
  Growth_t = StartBalance_t × Return rate
  EndBalance_t = max(0, StartBalance_t + Growth_t − Annual withdrawal)

This formula shows how your portfolio evolves when you take money out and earn returns. If withdrawals are too large relative to growth, the ending balance will eventually reach zero.

2. Years until depletion

Years until depletion =
  First year t where EndBalance_t = 0
  (or null if wealth never reaches zero within horizon)

The years-until-depletion metric is a simple way to see whether your current plan is likely to exhaust your portfolio within the modeled horizon. If the value is null, your wealth survives the entire period.

3. Inflation-adjusted wealth

Inflation rate (decimal) =
  Inflation rate (%) ÷ 100

Inflation factor for year t =
  (1 + Inflation rate)^t

RealEndBalance_t =
  EndBalance_t ÷ Inflation factor for year t

Inflation-adjusted balances show your wealth in today’s dollars. Even if your nominal balance stays flat or grows slowly, inflation can erode its real purchasing power.

4. Withdrawal rate and decay risk score

Withdrawal rate (WR) =
  Annual withdrawal ÷ Starting wealth

Return rate (RR) =
  Expected annual return (decimal)

Simple decay risk score (0–100) ≈
  min(100,
      max(0,
          100 × (WR / max(0.01, RR + 0.02))
      )
  )

The decay risk score is a rough index that compares your withdrawal rate to your expected return plus a small buffer. Higher withdrawal rates relative to returns produce higher scores, indicating greater risk that your wealth could erode or be depleted.

5. Target longevity comparison

Target longevity (years) =
  User-entered target horizon

If Years until depletion ≤ Target longevity:
  Plan may be fragile relative to target

If Years until depletion is null or > Target longevity:
  Wealth appears likely to last at least as long as target

This comparison helps you see whether your current plan aligns with your desired time horizon. If your wealth is projected to run out before your target, you may need to adjust withdrawals, returns, or horizon.

These formulas do not attempt to model every nuance of retirement income or portfolio management. Instead, they give you a clear, consistent framework for thinking about how your spending and expected returns interact over time.

Understanding wealth decay risk

When you start drawing from your investments, the question shifts from “How do I grow my wealth?” to “How do I make it last?” Wealth decay risk is the possibility that your portfolio shrinks faster than you expect, either because withdrawals are too high, returns are too low, or both. This analyzer gives you a structured way to explore that risk.

Balancing withdrawals and growth

At the heart of wealth decay is a simple trade-off: every dollar you withdraw is a dollar that no longer participates in future growth. If your withdrawals are modest relative to your returns, your portfolio can sustain them and may even grow. If withdrawals are large, your wealth can erode quickly.

By entering your starting portfolio, annual withdrawal amount, and expected return, you can see how this trade-off plays out over time. The schedule shows starting balance, withdrawals, growth, and ending balance for each year, along with inflation-adjusted values.

Choosing realistic assumptions

Expected returns and inflation are uncertain. Markets can be volatile, and inflation can shift. Rather than trying to predict the future perfectly, use the tool to explore a range of scenarios. A conservative case might use lower returns and higher inflation; an optimistic case might use higher returns and moderate inflation.

Running multiple scenarios helps you see how sensitive your plan is. If small changes in assumptions dramatically change the years-until-depletion metric, your plan may be fragile and worth revisiting.

Worked example

Imagine you have a $1,000,000 portfolio, plan to withdraw $40,000 per year, expect a 5% annual return, and assume 2.5% inflation. You choose withdrawals at the start of each year and a 30-year horizon.

In year one, you withdraw $40,000, leaving $960,000. That amount grows by 5% to $1,008,000. The schedule repeats this pattern each year, showing how the balance evolves. If the portfolio never reaches zero within 30 years, your plan appears sustainable under these assumptions. If it does reach zero, the years-until-depletion metric tells you when.

The tool also calculates a decay risk score based on your withdrawal rate relative to expected returns. In this example, the withdrawal rate is 4% ($40,000 ÷ $1,000,000). With a 5% expected return, the score may be moderate, suggesting a reasonable balance between spending and sustainability.

Using target longevity

Many people have a target horizon in mind—20, 30, or 40 years of withdrawals. By entering a target longevity, you can see whether your wealth is projected to last at least that long. If the years-until-depletion metric is shorter than your target, you may need to adjust your plan.

Adjustments could include lowering withdrawals, increasing savings before retirement, revisiting your asset allocation, or planning for part-time work. The tool doesn’t tell you which path to choose, but it makes the trade-offs visible.

Practical tips

Run multiple scenarios with different withdrawal amounts and return assumptions to understand your plan’s sensitivity.
Consider modeling both start-of-year and end-of-year withdrawals to see how timing affects sustainability.
Use inflation-adjusted balances to think in today’s dollars, especially when planning for long retirements.
Export the CSV schedule and share it with a financial advisor to support more nuanced planning discussions.
Revisit your analysis periodically as markets, inflation, and your spending patterns change.

Wealth decay risk is not something to fear, but something to understand. When you can see how your withdrawals and returns interact over time, you’re better equipped to design a plan that feels both sustainable and aligned with the life you want to live.

Frequently Asked Questions

How many years can I model?

You can model up to 60 years. This is usually enough to cover most retirement horizons and long-term withdrawal plans. Remember that longer horizons increase sensitivity to your assumptions.

What happens if my portfolio hits zero?

If the ending balance reaches zero, the schedule records the year of depletion and keeps the balance at zero thereafter. The years-until-depletion metric reflects the first year your wealth is exhausted.

Can I model variable withdrawals?

This version uses a constant annual withdrawal amount. To model variable withdrawals, you can export the CSV and adjust the schedule in a spreadsheet, or rerun the tool with different withdrawal levels to approximate changes over time.

Does the decay risk score replace professional analysis?

No. The decay risk score is a simple index, not a comprehensive risk model. It can highlight when your withdrawal rate may be aggressive relative to expected returns, but it does not account for taxes, sequence of returns, or detailed cash flows.

Is this financial advice?

No. This tool is for education and planning. It does not provide personalized financial advice or consider all aspects of your situation. Consider working with a qualified advisor to interpret the results and build a comprehensive plan.

Does the tool store my inputs?

The tool briefly stores your last inputs in localStorage to restore them after a refresh and auto-run the analysis. After restoration, the saved data is cleared. No information is sent to external services unless you enable analytics or ads via the cookie banner.