- Calculate
- Select the type of calculation you wish to use. You can calculate either the maximum withdrawal for a period of time, or how long a specific withdrawal amount will last.
- Starting balance
- This is the total amount that you currently have invested. Include any sources of investment savings such as 401(k)s, IRAs and annuities that you wish to include in this analysis.
- Annual return
- This is the annual rate of return you expect from your investments after taxes. The actual rate of return is largely dependent on the type of investments you select. For example, the total return including dividends of the S&P/TSX Composite Index for the 10 year period from December 31, 2013 through December 31, 2023 was 8.6% (source www.spglobal.com). Savings accounts at a bank or credit union may pay as little as 2% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
When you are taking periodic distributions from an account or investment, the return earned is often lower due to more conservative investment choices to help ensure a steady flow of income.
- Expected annual inflation rate
- What you expect for the average long-term inflation rate.
- Amount of distribution
- This is the amount that you expect to be withdrawing from your investments. All distributions are assumed to be taken at the beginning of each period. If you choose the calculation option 'Maximum periodic distribution' this field will be calculated.
- Years of distributions
- This is the number of years that your distributions are to last. If you choose the calculation option 'Years balance will last' this field will be calculated.
- Inflation adjustments
- These selections allow you to adjust your distributions for inflation. If you choose 'No adjustment for inflation' your distribution will remain at a constant amount for the entire duration of your distributions. 'Increase distributions annually' will increase your distribution amount at the end of each year by the rate of inflation. This begins at end of the first year of distributions. Choosing this option helps illustrate the cost of providing a current amount of purchasing power throughout your distributions.
- Distribution frequency
- The frequency that withdrawals are made from this account. Options include weekly, every other week, twice monthly, monthly, quarterly, semi-annual and annually.
