401(k) Monthly Income Calculator

A 401(k) distribution and payout calculator: what a balance really pays a month, by three rules that disagree — a fixed rate, a set term, and the IRS minimum.

Ask what a 401(k) pays a month and you get a number. What you're not usually told is that the number came from a rule somebody chose, and swapping the rule can change the answer by half.

Three rules, three answers, all arithmetically correct

A 401(k) balance has no monthly income. A salary has one; a balance just has a size, and the income depends entirely on how fast you're willing to spend it.

The calculator runs three rules side by side because that disagreement is the useful output. A fixed withdrawal rate treats the balance as something meant to outlive you. An amortised figure treats it as money to be spent by a chosen date, and pays more because it leaves nothing behind. The required minimum distribution is neither, just the floor the IRS sets once you reach 73 or 75.

The spread isn't error. It's the question nobody answers for you.

How to work all three out by hand

Each rule is one line of arithmetic on the same $500,000, and on the defaults above they finish more than $1,300 a month apart.

1. The fixed rate: balance times rate, over twelve. $500,000 at 4% is $20,000 a year, so $1,667 a month.
2. The amortised payment: the mortgage formula run backwards. Turn the 5% return into a monthly rate of 0.4167% and the 25 years into 300 payments, then $500,000 × 0.004167 ÷ (1 − 1.004167⁻³⁰⁰) = $2,923 a month.
3. The required minimum distribution: balance over the Uniform Lifetime Table divisor, then over twelve. To see this one on the screen, move the age box from 66 to 73, because before your starting age the required amount is zero and the card sits empty. At 73 the table divisor is 26.5, so $500,000 ÷ 26.5 = $18,868 a year, or $1,572 a month.

The lowest of the three is the one the law imposes and the highest is the one that leaves nothing behind, and the $500,000 never moved. That spread is the entire argument of this page, and it's the reason a single monthly figure quoted anywhere should make you ask which rule produced it.

The mistake that ruins the second line is using the annual return where the formula wants a monthly one. Put 5% into the rate slot instead of 0.4167% and the payment comes out far too low, which looks conservative and is simply wrong. The other trap is the third line. A required distribution is money that has to leave the plan, not money you have to spend, and the required distribution calculator works that one through properly.

The 4% rule answers the other question, not this one

The claim was narrower than the retelling: a starting withdrawal of 4%, raised each year with inflation, survived a thirty-year retirement across the historical US periods tested. It's a rule about whether the money runs out, which is a question about longevity and not about monthly income, so the drawdown calculator puts both sides of the argument and lets you set the rate yourself.

What the number doesn't include

Tax, unless you complete the last section. Pre-tax money is ordinary income on the way out, so a $2,000 monthly figure is not $2,000 in your account.

The subtler cost has its own section below, because it is the reason a retirement income figure quoted before tax is close to meaningless.

Your withdrawal taxes your Social Security

IRC §86 decides how much of a Social Security benefit is itself taxable, using a figure called provisional income: everything else on your return plus half the benefit. Below $25,000 single or $32,000 married filing jointly, none of the benefit is taxed. Above $34,000 and $44,000, up to 85% of it is.

Now put a pre-tax withdrawal into that. The withdrawal is other income, so it raises provisional income directly, and each extra dollar can pull 50 cents or 85 cents of previously untaxed benefit onto the return behind it. You are taxed on the withdrawal and on benefit money that was not being taxed at all before you took it.

Advisers call it the tax torpedo. The calculator reports it as its own line, so you can see it instead of inferring it from an effective rate that looks wrong.

One detail explains why this keeps getting worse. Those base amounts are fixed in IRC §86(c) and carry no inflation adjustment. They have never moved. A rule written to catch a small minority of retirees now reaches a large share of them, purely because everything else went up and $25,000 didn't.

Two things follow for anyone choosing a withdrawal rate. Roth money doesn't raise provisional income, so drawing from the Roth side in a year when you're near a threshold can leave the benefit alone. And the years between stopping work and claiming Social Security are usually the cheapest window anyone gets for a large pre-tax withdrawal, because the benefit isn't there to be dragged in yet. Before 59½ the 10% additional tax applies as well, which changes the arithmetic again.

Inflation does the damage quietly

A level monthly payment shrinks. At 2.5% inflation, $2,000 a month buys about $1,562 of today's goods after ten years and $1,220 after twenty.

That's not a small adjustment across a retirement that might run thirty years. A percentage-of-balance rule moves with the balance, which helps when markets rise and hurts precisely when they don't. An amortised payment doesn't move at all. Neither is indexed to prices, and no arrangement of a fixed pot of money can be, which is part of why Social Security, which is indexed, matters more to most retirements than the balance does.

The required minimum distribution is a floor, not a plan

From 73 or 75, depending on the year you were born, a share of the balance has to come out annually whether you need it or not. The IRS divisor falls every year, so the share rises.

Two things follow. It's a minimum you must remove from the account, not money you must spend, so once the tax is paid it can leave the 401(k) for a taxable brokerage account and stay invested. And for a large balance it can force more income than you want in a year, which is the argument for drawing some of the account down earlier at a lower rate. What the required distribution looks like on your balance is worth seeing well before it starts.

If the monthly figure looks too small

A monthly figure that looks too small is the common outcome.

Three things move it. Only one is comfortable. Saving more, which is a question for the contribution planner. Working longer, which adds 401(k) contributions and shortens the drawdown at the same time, and is why it moves the number so much. Or spending less. That one gets discovered, not chosen. Whether the balance is on track for your age is the earlier version of this question.

A higher assumed return doesn't move it. Typing 9% into the return field makes the number on the screen bigger and changes nothing at all about the money you'll actually have.

Frequently asked questions

How much will my 401(k) pay me per month?

There's no single answer, because it depends on a rule you choose, not on a fact about the account. At a 4% withdrawal rate, $500,000 pays about $1,667 a month before tax. Emptied evenly over 25 years at a 5% return it pays closer to $2,900. Both are arithmetic. The difference is whether the money has to outlive you.

How much monthly income will $1 million in a 401(k) give me?

About $3,333 a month before tax at a 4% rate, or roughly $5,800 a month if you empty it over 25 years at a 5% return. After federal tax the first figure is smaller again, and how much smaller depends on your other income and whether you're claiming Social Security.

What happens when the amortised payment empties the balance?

The payments stop. That's the trade the second line makes: $2,923 a month beats the 4% figure precisely because the arithmetic is allowed to finish the $500,000 off, and on the defaults above it finishes at the end of 25 years. Social Security carries on. The plan doesn't. Set the term longer than you expect to live, or use the fixed-rate line and accept the smaller number. I can't tell you which of those two risks is the one to be more worried about.

Does my 401(k) monthly income rise with inflation?

Not on its own. A level withdrawal buys less every year, and at 3% inflation $2,000 a month buys about $1,488 of today's goods after ten years. A percentage-of-balance rule moves with the balance, which is not the same as moving with prices.

Do I have to take money out of my 401(k) every month?

Not until the IRS requires a minimum distribution, which starts at 73 or 75 depending on your birth year, and even then the requirement is annual, not monthly. Before that the schedule is entirely yours. Monthly is a convenience that makes a balance feel like a paycheck, not a rule.

How is 401(k) income taxed in retirement?

Pre-tax money is ordinary income when it comes out, taxed through the normal bands once stacked on everything else. Roth money that meets the qualification rules isn't taxed at all. The awkward part is that a pre-tax withdrawal raises provisional income and can make part of your Social Security taxable too.