That is usually a pretty good assumption, but if you want to take taxes into account, you can use a tax-adjusted interest rate. The main assumption with regard to taxes is that the interest is earned tax free within the retirement account. Taxes: This spreadsheet doesn't include any tax calculations. The Age column was added to the Google Sheets version, also.
EXCEL MAXIMUM DRAWDOWN UPDATE
Update - The Age column in the table was fixed for the choice of an Annual withdrawal frequency. It should be adding the Withdrawal Amount column and the Additional Withdrawal column (not the Interest Earned column). Update - The error in the Total Withdrawals field was fixed (error introduced accidentally during update). The table includes an Age column and the graph uses Age as the horizontal axis. Choosing "beginning" means the first withdrawal is made before any interest is earned. Choose whether the withdrawal is made at the beginning or end of a month or year. For example, you could use this feature to see what a huge one-time medical bill might do to the plan. Make adjustments to the normal scheduled withdrawal by entering an Additional Withdrawal amount within the Payout Schedule, either positive or negative.
You are more likely to make monthly withdrawals, but for a quick analysis and a more concise payout schedule, the annual option is handy. Create a monthly or annual payout schedule. This is an important part of any retirement planning calculation. Enter an annual inflation rate to automatically increase the amount withdrawn each period. The initial withdrawal will be adjusted for inflation based on the number of years until your retirement.
Enter the amount you expect to withdraw in today's dollars.
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