1. What is Future Value with Withdrawals?

The Future Value with Withdrawals calculation determines how much an investment will be worth in the future when regular withdrawals are made. It accounts for compound growth while subtracting the impact of periodic withdrawals.

2. How Does the Calculator Work?

The calculator uses the Future Value with Withdrawals formula:

Where:

• \( FV \) — Future value of the investment
• \( P \) — Initial principal amount
• \( r \) — Annual interest rate (in decimal)
• \( n \) — Number of years
• \( W \) — Annual withdrawal amount

Explanation: The first part calculates compound growth, while the second part accounts for the impact of regular withdrawals on the final balance.

3. Importance of Future Value Calculation

Details: This calculation is crucial for retirement planning, trust funds, and any scenario where you need to understand how regular withdrawals will affect your investment's growth over time.

4. Using the Calculator

Tips: Enter the initial investment amount, annual interest rate (as decimal), number of years, and annual withdrawal amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What if I make monthly withdrawals instead of annual?
A: You would need to adjust the rate and withdrawal amount to monthly equivalents (divide annual rate by 12 and use monthly withdrawal amount).

Q2: What happens if withdrawals exceed investment growth?
A: The future value will decrease over time and could become negative if withdrawals are too large relative to growth.

Q3: How does this differ from regular future value?
A: Regular future value only accounts for growth, while this version also accounts for the reduction from withdrawals.

Q4: Can this be used for retirement planning?
A: Yes, it's particularly useful for estimating how long retirement savings will last with regular withdrawals.

Q5: What if the interest rate is zero?
A: The formula simplifies to FV = P - (W × n), as there's no growth to compound.