Income and spending
Income and spending: how much can your principal support?
Compare income from a principal with planned withdrawals, spending periods, and the trade-off between preserving and using the balance.
A pool of money can support spending in two ways: use only the income it produces, or spend the principal gradually as well. These approaches lead to different monthly amounts and timelines.
All insights in this topic
See how principal, yield, spending frequency, and time change monthly income and funding runway.
Retirement spending
How much can you withdraw monthly from $200,000 for 30 years?
$200,000 can provide about $841 a month for 30 years at a steady 3% return, before taxes, fees, inflation, and uneven investment returns.
Cash flow
How long can $500,000 fund $3,000 a month?
$500,000 can fund $3,000 a month for about 20 years and 2 months at a steady 4% return. Preserving the principal requires about 7.25% in this model.
Lottery
If you win $1 million, how much can you spend each day for 30 years?
If $1 million is spread over 30 years with no return, it becomes about $91 per day or about $2,778 per month before taxes, fees, inflation, and spending changes.
Lottery
How much interest on a $100M jackpot?
At a 4% annual yield, $100 million produces $4 million a year, about $333,333 a month, or about $10,959 a day before additional taxes and fees.
Three parts of a cash-flow question
1. Choose preservation or drawdown
Decide whether the principal should remain intact or be used over time. The choice changes both the monthly budget and the ending balance.
2. Match income and spending periods
Convert annual yield, monthly spending, and daily withdrawals to a consistent schedule before comparing them.
3. Test duration and purchasing power
A monthly amount matters only beside the years it must last, and inflation can reduce what a fixed payment buys.
Assumptions and limits
- Returns and interest are modeled as constant even though actual income can change.
- Displayed amounts generally exclude taxes, fees, and inflation unless stated.
- A modeled runway is not a guarantee that a portfolio will last that long.