Question 1

What is a withdrawal plan?

Accepted Answer

A withdrawal plan is the counterpart of a savings plan: a fixed amount is paid out regularly from existing capital, for example a portfolio of funds or ETFs. The rest stays invested and keeps working. Depending on the withdrawal and the return, the capital lasts a certain number of years or – if you only withdraw the returns – indefinitely.

Question 2

How long will my money last with monthly withdrawals?

Accepted Answer

It depends on three figures: capital, withdrawal and return. Example without tax and inflation: 300,000 € at a 4 % annual return lasts exactly 25 years at 1,572 € a month. If you withdraw only about 982 € a month, the capital is preserved. Choose the mode “How long will the money last?” in the calculator and enter your figures.

Question 3

How are withdrawals from a portfolio taxed in Germany?

Accepted Answer

Only the gain share of each withdrawal is taxable, not the capital you paid in. It is subject to 25 % flat-rate tax plus 5.5 % solidarity surcharge (26.375 % together), plus church tax if applicable. For equity funds 30 % of the gain is tax-free (partial exemption, § 20 InvStG), for mixed funds 15 %. Gains up to the saver's allowance of 1,000 € a year (2,000 € for jointly assessed couples) remain tax-free. The calculator approximates the gain share using the average cost basis; banks actually apply first-in, first-out.

Question 4

What is the 4 % rule?

Accepted Answer

The 4 % rule is a rule of thumb from US studies of the 1990s: withdrawing 4 % of the portfolio in the first year and raising the amount by inflation every year would almost always have lasted 30 years with a stock/bond mix in historical US data. Conversely, the required capital is 25 times the annual withdrawal. The rule ignores German taxes and costs and only reflects the periods studied – it is not a guarantee.

Question 5

What does “perpetual withdrawal” mean?

Accepted Answer

With a perpetual withdrawal you only take out what the capital earns. The wealth is preserved and can be passed on. If an inflation rate is set in the calculator, the capital is preserved in real terms: it grows by inflation every year and your withdrawal rises as well. If the return does not exceed inflation, no perpetual withdrawal is possible.

Question 6

How much capital do I need for financial independence (FIRE)?

Accepted Answer

As a rough guide, the FIRE movement uses 25 times annual spending (the 4 % rule). Anyone who needs 2,000 € a month ends up at 600,000 €. It becomes much more precise if you enter your return, inflation, taxes and the desired period: in the mode “How much capital do I need?” the calculator works out the requirement up to a point in time, such as the start of the state pension, and also shows the capital for a perpetual withdrawal.

Question 7

What return should I assume in a withdrawal plan?

Accepted Answer

Use the return after costs, and be cautious. A broadly diversified equity portfolio has historically earned more over the long run than a mix with bonds or cash, but it fluctuates strongly. Many plans therefore assume 3 to 5 % for mixed portfolios. Try several values: the difference between 4 and 6 % often decides many years of duration. Past returns are no guarantee for the future.

Question 8

Why does the calculator assume a constant return?

Accepted Answer

A constant return keeps the calculation transparent and comparable. In reality markets fluctuate, and the order of returns matters a lot in the withdrawal phase: losses in the first years hurt more than later ones because you sell units at low prices. So build in a buffer, for example a lower return or a cash reserve for two to three years.

Guide: Withdrawal Plan Calculator

Withdrawal Plan: How to Turn Your Portfolio into a Monthly Income

The 4 % Rule: What the US Study Says – and What It Doesn't

Taxes on Withdrawals in Germany: Why Only the Gain Share Counts

Calculating Financial Independence: How Much Capital Do You Need for FIRE?

Inflation and Sequence of Returns: The Two Underrated Risks of a Withdrawal Plan

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