For educational and informational purposes only — not investment, tax, or legal advice. The results are hypothetical, do not reflect any actual investment, and are likely to differ significantly from actual future experience. Appropriate decisions depend on individual circumstances this tool does not consider.
It models a retirement spending strategy that keeps money invested in equities and each year spends roughly what a life annuity would pay on the current balance. It is not a model of buying an annuity — the money stays invested, so there is no income guarantee and the balance can be depleted; the annuity payout is used only as a longevity-aware spending rule.
The simulator runs thousands of scenarios, each drawing a random sequence of historical equity returns and inflation, and reports the distribution of outcomes: how the balance, annual spending, taxes, and estate might evolve, in today's dollars.
The strategy works best when the equity portfolio is one component of a broader plan — essentials covered by reliable income (Social Security, pensions, a TIPS ladder) so the equity spending can vary from year to year without endangering your standard of living.
The form is organized in four input tabs; a fifth Results tab appears after you press Run simulation. Every field has a ? button with a detailed pop-up explanation.
The primary annuitant (left) and optional joint annuitant (right): age and gender, which select the mortality tables used both to price the annuity-equivalent payout and — with Simulate annuitant mortality, on by default — to draw each scenario's deaths, so the simulation ends at the last survivor's death and the ending balance is the estate.
Below them, the simulation parameters:
Optionally simulate long-term-care events, drawn independently for each annuitant: from the start age (default 84) each year brings an onset probability (default 8%); care lasts until death, costs a real annual amount per person (default \$150,000/yr), and raises the person's mortality. The funding split says how care costs beyond your income are financed — what share is sold from fixed income vs from equities. The routine cap in care (default 0.4) tightens the spending cap once anyone is in care: discretionary "wants" spending throttles down, so more of the portfolio stays invested as the care reserve and the net drag of care on the estate is smaller.
Care costs vary a lot by region and setting. The federal cost-of-care tool at ltcfeds.gov/tools/cost-of-care shows current local costs for home care, assisted living, and nursing facilities — useful for setting the LTC cost input.
Add any number of income streams — Social Security, pensions, rent. Each has an annual amount, an indexed-to-inflation flag (yes = constant in real terms, like Social Security; no = constant nominal, eroding with inflation), a taxable percentage (85% is typical for Social Security), and an optional end at a chosen annuitant's death. The household spends all of its income every year, on top of the equity proceeds.
The income tax schedules — a deduction plus marginal tiers for single and married-filing-jointly filers (defaults are the 2025 US federal values) — apply to real (today's-dollar) values. The married schedule applies while both annuitants are alive, the single schedule after one dies.
Add your investment accounts (IRA, 401(k), brokerage, …). Each holds dollars in up to five asset classes: Equities plus four fixed-income classes modeled on proxy ETFs — short-term TIPS (VTIP), medium-term TIPS (TIP), money market (BIL), and bonds (BND). Fixed-income returns come from a model that respects their covariance with each other, with equities, and with inflation (nominal bonds suffer when inflation surprises; TIPS are largely protected).
The simulated equity portfolio is the sum of the accounts' Equities holdings — there is no separate "amount" input. Each account also sets how its distributions are taxed: as ordinary income (IRA-style) or at a flat rate (for a brokerage account, use a rate below the capital-gains rate, since part of every sale is untaxed return of capital).
Equity return samples: US S&P 500 total returns (Damodaran/NYU Stern) with CPI-U (BLS); the cross-country samples use the Jordà–Schularick–Taylor Macrohistory Database; the cap-weighted world index additionally uses the Kuvshinov–Zimmermann Big Bang database (both under CC BY-NC-SA 4.0) and, from 2009, the realized returns of Vanguard's VT ETF. Annuity payouts are priced from Society of Actuaries 2012 IAM mortality tables.
The full model — pricing, the bootstrap, the dynamic inflation/rate model, the household extensions, and every assumption and caveat — is documented in the Methodology.
Software is provided under the Mozilla Public License 2.0, without warranty of any kind: view license. Source code: github.com/sf210/equity_portfolio_withdrawal_simulator.