Withdrawal rate options (SWR / LTWR / PWR)

The Withdrawal Rate Simulator stress-tests how long your portfolio lasts at a given withdrawal rate, and lets you reason about three related withdrawal concepts. You enter one rate and choose which one it is — the app derives the other two.

The three rates

• Safe Withdrawal Rate (SWR) — the maximum inflation-adjusted rate that avoids depleting your portfolio over a fixed horizon (the classic 4% rule assumes a 30-year retirement). Highest of the three.
• Long-Term Withdrawal Rate (LTWR) — a sustainable middle ground over a long (50-year) horizon, where SWR and PWR converge.
• Perpetual Withdrawal Rate (PWR) — the rate that preserves your principal indefinitely. The most conservative; typically below 4%.

For typical inputs the ordering always holds: PWR ≤ LTWR ≤ SWR.

How to use it

1. Pick which rate you are entering with the "I'm entering this rate as" selector (SWR, LTWR or PWR).
2. Drag the slider to set that rate. The selected option is highlighted in the results, the other two are labelled Derived.
3. Adjust the retirement horizon — it is the horizon used for SWR. LTWR uses a fixed 50-year long-term horizon.

How the conversion works (assumptions)

The conversion uses a deterministic amortization model, separate from the stochastic Monte Carlo success-rate chart below it. A single latent variable — the implied real (after-inflation) return r — links the three rates:

• Annuity factor: A(r, N) = r / (1 − (1 + r)^(−N)) — the level real withdrawal (as a share of the initial portfolio) that depletes it to zero over N years. Its limit as r → 0 is 1/N.
• PWR = r — withdrawing only the real return preserves the real principal forever (equals the limit of A(r, N) as N → ∞, for r > 0).
• SWR = A(r, N_swr) with N_swr your retirement horizon (default 30y).
• LTWR = A(r, N_ltwr) with N_ltwr = 50y (fixed long-term horizon).

From the rate you enter and its type, the app backs out r (directly for PWR, by inverting A for SWR/LTWR) and recomputes the other two. Because every rate is a deterministic function of r, conversions round-trip exactly.

Edge case — non-positive real return

If the entered rate is below 1/N (for example an SWR under ~3.33% on a 30-year horizon), the implied real return is non-positive. No positive rate can then preserve principal forever, so the perpetual rate is shown as 0% and a note explains why.

Reading the success-rate chart

Below the three rates, the bar chart shows the Monte Carlo success rate at each candidate withdrawal rate over your horizon. Green bars (≥90%) are robust; amber and red flag fragility to bad sequences of returns. The dashed line marks your currently selected rate.