A financial tool estimates the balance of an investment account after a specified period, considering both growth from interest or investment returns and periodic withdrawals. For example, it can project the remaining balance of a retirement account after regular monthly withdrawals over 20 years, assuming a specific rate of return.
This type of projection is critical for financial planning, particularly for retirement planning, budgeting, and other long-term financial goals. Understanding the impact of regular withdrawals on long-term investment growth enables informed decisions about sustainable withdrawal rates, initial investment amounts, and investment strategies needed to achieve desired financial outcomes. Historically, such calculations were performed manually or with complex spreadsheets, but online tools and financial software have made these projections much more accessible.
