About the Investment Income Sustainability Calculator
Most calculators answer one of two questions. A compound interest calculator tells you how much your money will grow. A FIRE calculator tells you how big a portfolio you need before you stop working. Neither one answers the question people actually ask when they are sitting on a lump sum:
If I invest this money and take out what I need to live on every month, will it still be there in twenty years?
That is the question this calculator exists to answer.
What Is an Investment Income Sustainability Calculator?
It models your investment as a cash-flow-producing asset rather than a growing pile of money. Three forces pull on the balance at the same time:
- Investment return pushes the balance up
- Withdrawals pull it down
- Inflation quietly raises the withdrawals you need and lowers what the remaining balance is worth
The calculator runs all three month by month, for as long as 100 years, and reports what is left at the end — in both plain currency terms and in today's purchasing power.
It is built for people considering an income-producing investment: a fixed deposit, a money-market fund, a bond portfolio, or any investment where you have a reasonable idea of the annual return available to you.
How the Calculator Works
Monthly simulation
Everything is simulated one month at a time. That matters, because withdrawals, contributions and compounding rarely line up neatly. A yearly calculation would materially distort the answer when you withdraw monthly but compound quarterly.
Each month follows a fixed order:
- Interest accrues on the invested balance
- Accrued interest is credited to the balance if this is a compounding month
- Any scheduled contribution is added
- Any scheduled withdrawal is taken out
- The month-end account value is recorded
The return rate
The annual rate you enter is treated as a nominal yearly rate, divided by twelve to accrue monthly:
Accrued interest is then credited to your balance according to the compounding frequency you select — every month, at months 3, 6, 9 and 12, or once at month 12. This is how bank deposits usually behave, and it avoids the distortion you get from applying a full quarterly or yearly rate to an end-of-period balance that has already had withdrawals taken out of it.
Where withdrawals come from
Withdrawals are taken from accrued interest first, then from the invested balance. That ordering is what makes it possible to tell the difference between living off income and eating your capital.
Inflation-adjusted withdrawals
When you enable the inflation adjustment, your withdrawal steps up once per year:
So a starting withdrawal of 250,000 per month with 5% inflation becomes 262,500 in year 2, 275,625 in year 3, and so on. Every month within a simulation year uses the same withdrawal amount, which is both easier to reason about and closer to how people actually adjust their spending.
Can You Live Off Fixed-Deposit Interest?
This is the most common version of the question, and the honest answer is: it depends on five variables, and only one of them is under your control today.
| Variable | Why it matters |
|---|---|
| Capital | Sets the ceiling on the income the investment can generate |
| Interest rate | Determines income today, but resets at every renewal |
| Expenses | The number that inflation attacks year after year |
| Tax | Withholding tax reduces the return you actually keep |
| Inflation | Raises your expenses and erodes your capital's real value |
A deposit paying 8% on 50 million generates 4 million a year. If you need 3 million a year, that looks comfortable. But if your expenses rise 5% a year and the deposit rate drifts down at renewal, the gap narrows every year. Twenty years in, the same lifestyle costs roughly 2.6 times what it cost at the start.
The calculator is designed to make that narrowing gap visible. Watch the income coverage ratio and the year in which withdrawals overtake annual investment income.
A note on rates: entering today's highest available deposit rate and projecting it forward for thirty years will flatter your plan. Run the calculation again with a rate two or three percentage points lower to see how much of your plan depends on rates staying where they are.
Why Inflation Matters
A portfolio that sits at 50 million for twenty years has not preserved anything. If prices have doubled over that period, the same 50 million buys half of what it once did. You are, in every way that matters, poorer.
This is why the calculator reports two ending balances:
- Ending investment value — the nominal balance, the number your bank statement would show
- Ending value in today's money — the same balance divided by cumulative inflation
The gap between those two numbers is the part of your wealth that inflation takes.
What Does "Preserving Capital" Mean?
Two different tests, and they are not interchangeable.
Nominal capital preserved
Your ending balance is at least as large as your starting investment, measured in plain currency units. This is the easier test, and it is the one most people have in mind when they say "I don't want to touch the principal."
Purchasing power preserved
Your ending balance, adjusted for inflation, still buys at least as much as your starting investment would have bought on day one. This is the stricter test and the more meaningful one for a retirement that lasts decades.
It is entirely possible — and very common — to pass the first test and fail the second. The calculator reports both separately, and never collapses them into a single pass/fail verdict.
Investment Income vs Withdrawing Principal
There is an important distinction between an investment running out and an investment being spent down.
If your withdrawals exceed the income the investment generates, the difference comes out of capital. The balance shrinks. A smaller balance generates less income next year, so the shortfall widens. This is a compounding effect working against you.
That is not automatically a mistake. Plenty of sound plans intentionally spend down capital — there is no prize for dying with an untouched portfolio. What matters is knowing that it is happening, and knowing whether the capital will last as long as you need it to.
The calculator classifies your result into one of four states:
| State | What it means |
|---|---|
| Real growth | Every withdrawal is funded and your capital gains purchasing power |
| Nominal growth | Every withdrawal is funded and the balance grows, but it buys less than before |
| Capital decline | Every withdrawal is funded, but you finish with less than you started |
| Depleted | At some point a withdrawal cannot be funded in full |
The Maximum Sustainable Withdrawal
Two figures are calculated automatically, by searching for the highest starting withdrawal that still satisfies each preservation test:
- Maximum withdrawal preserving nominal capital — the most you could take while finishing with at least your starting amount in currency terms
- Maximum withdrawal preserving purchasing power — the most you could take while finishing with at least your starting amount in real terms
The second figure is always the lower of the two, often by a wide margin. It is also the more realistic target if the money has to support you for decades.
If you have enabled recurring contributions, these figures include them. Contributions can make a withdrawal look sustainable when it is really being propped up by money you are still putting in, so the calculator labels them clearly when contributions are switched on.
Reading the Withdrawal Rate
The calculator shows your starting withdrawal rate:
A 3,000,000 annual withdrawal from a 50,000,000 investment is a 6% starting rate. This is a useful diagnostic, but it is not a "safe withdrawal rate" in the sense that FIRE literature uses the term. The 4% rule comes from studies of volatile equity portfolios over 30-year periods. A fixed deposit with a contractual rate behaves completely differently. Treat the rate as a sense-check against the actual simulation, not as a rule of its own.
What This Calculator Does Not Model
Being explicit about the boundaries:
- Returns are fixed for the whole period — no variable rates, no market volatility, no sequence-of-returns risk
- No taxes, fees or withholding. Enter an after-tax return if you want an after-tax projection
- No fixed-deposit maturity rollovers, renewal rules or early-withdrawal penalties
- A single inflation rate applies to everything — no separate healthcare or education inflation
- One investment, one currency, one account
If any of those would change your answer materially, treat the output as a starting point rather than a conclusion.
Disclaimer
This calculator is for educational and planning purposes only. It uses fixed assumptions for investment returns and inflation, while actual returns, interest rates, taxes, fees and living costs can change over time. The results are estimates and should not be considered financial or investment advice.