+ New Calculation

1/N

At its simplest, the 1/N strategy spreads your current portfolio value over the years remaining in your retirement:

Withdrawal=Current portfolio valueYears remaining\text{Withdrawal} = \frac{\text{Current portfolio value}}{\text{Years remaining}}

If you set a Target End Portfolio Value, FI Calc sets that amount aside before dividing. Minimum or maximum withdrawal limits can also change the final amount.

For example, if you estimate a 30 year retirement and start with $1,000,000, then your first year withdrawal will be $1,000,000 / 30, or $33,333.33.

Later on, if we assume that you have $250,000 in your portfolio with 2 years remaining, then your annual withdrawal would be $250,000 / 2, or $125,000.

Strengths

  • Ensures that you spend every available dollar
  • Never prematurely runs out of money

Weaknesses

  • Tends to spend more money toward the end of your retirement than at the beginning.