www.scantips.com

A Performance Calculator for S&P 500 Index Funds History

Concerned with Retirement Adequacy and Withdrawal Safety

The 4% Rule was about investing in balanced funds (perhaps a 60/40 fund, 60% stock mixed with 40% bonds), thought a safety factor since bond income is not affected by a down stock market (but bonds do not pay what stocks can). An issue of a 4% Rule is that it does not specify any specific fund type nor gain capability, nor any specific fund value. More money should always provide withdrawals longer. My interest was in the suitability of a 4% Rule for withdrawals from a 100% S&P 500 fund. This calculator uses actual past market data, and does not know the future market. This article is intended as a guide about planning a safe and sustainable investment and retirement withdrawal plan from a S&P 500 Index fund that would survive typical bad market times (like those which have actually happened). The long term overall rewards are well worth it. All S&P 500 Index funds track this S&P 500 Index, but their annual fund fees do vary (so look for a low fee).

Withdrawals cost the investment far more than just the dollars withdrawn. It also costs all the substantial long term future compounded earnings those withdrawal dollars could have earned. That compounding over the years is a mighty big deal. My opinion of the best plan is of course to start early to have the many years compounding, and postpone all withdrawals until retirement, so the fund will continue growing, and will be there when actually needed. Then (if you have planned early enough) withdrawing what's needed to supplement Social Security. It's only reasonable to plan for affording long term care too, but hoping to be able to leave that to the kids instead is another plan. The point here is the valid concern that continuous withdrawals during earlier years or during bear market downturns (before the fund has grown to be able to afford the withdrawals too) could deplete a fund, ending it prematurely, not lasting long enough for retirement.

S&P 500 Index Withdrawal Survival Depletion Test

A 2nd calculation done here is the Withdrawal Survival Depletion Test (results below the S&P 500 calculator) which when enabled, performs an examination for S&P 500 Index funds to show how market drops and/or withdrawals have survived in the past bad bear market history typical of the real world over the last 55 years. The Depletion Test is not turned on the first initial time, because starting every year involves computing about 1540 years (takes a second or two on my computer), automatically restarting at every starting year of the 55 years. You can turn it on if interested, but it may be slower on a slower computer. The main calculator will also of course show any withdrawal depletion crashes for data you enter, but the Depletion Test tests your withdrawals starting at every year over the 55 years (for example 2000 was not a good starting year). Experiment a bit and you will see what it does. Again, it is past data, but it is actual data that did happen, so perhaps it is typical possibilities.

The S&P 500 calculator and also the fund Withdrawal Survival Depletion Test below examines 55 years of historic S&P 500 returns. Don't miss that, there is a lot there. It can show what did happen in the past, but the future is still unknown. Expectations are good though, and you should be sure to at least see a quick look at a summary to get the correct idea about the worth of S&P 500 Index investments. Both calculators use your input parameters, and there is also a list of guided Examples below to show the calculator options, which can compare and show the effect of the past history and very importantly, show the effect of withdrawals (4% or any others). It offers an interesting view about the years of market gains. It can also show compounding of gains over a multi-year period, including the effect of withdrawals or additional investment. 2026 is an incomplete partial year so Annualized Return cannot be computed for the current year. But without 2026, it can show the Annualized Return values of the span.

But there is also a lot more here. This page is just the calculators (and some history statistics), but the page was far too long as one page, so the introductory material describing the S&P 500 and the market and the 4% Rule was reluctantly moved to a second page at A few Market Things you need to know if you don’t already. If you are new to the market, it's there if you want to see it.

My strong suggestion is:   Plan and start preparing decades early for retirement, because many years of compounding is your best investment tool. Reinvest all dividends and don't withdraw anything until retirement. It is going to happen, stopping your salary then, but you might have 30 years still left. So preparing for it should be a major thought, to avoid moving to the street. Take a minute now to consider the seriousness of that. Then the final amount available at retirement might be a huge pleasant surprise. Relatively massive withdrawals might be possible during retirement if there were enough investing years (see the Example 4 below).

We can't know future performance, however the overall S&P annual gain has always averaged about 10% a year (for at least 50 years or maybe 100, price-wise, without including dividends), and even more in its good years, but also with losses in a few bad years. Multiple bad years in a row, combined with fund withdrawals can crash a fund. We have had some pretty bad times, 1972-74, 1981-82, 2000-03, 2008, the pandemic in 2020, and of course 2022. The same kind of periodic market crashes could happen, so the past is good as typical examples, and are still routinely expected now and then (the bitter with the sweet, which averages out, and the sweet easily wins). There is much more good times than bad, so it is very good overall. If your withdrawal strategies survives those past times, it likely survives any future times too. If your withdrawals don't deplete the account when down, then it always recovers, and the good times are sweet. We can't see the future, but the calculator below computes "how much" occurred in past "typical" bad crashes. You might plan for some of it by having more fund money in the fund, and by eliminating withdrawals, especially during bad market times.

Withdrawal Strategies

Continued withdrawals as dollar amounts can be dangerous. Fixed amounts need to be adjusted lower when the market is down, because a fixed dollar amount can seriously deplete the account when low. For example, fixed withdrawals of only $200 per month (foolishly starting at first year) depletes this S&P 500 fund in 14 starting years since 1970 (meaning, withdrawing soon after starting, before it grows, or in low periods, are dangerous). Withdrawals of course reduce your investment, and it should be obvious that also seriously reduces your future compounded gains. The good plan is to add more investment all along instead of reducing it. So let your investment grow for maybe 30 years, and only start withdrawing at retirement, and that becomes an extremely different picture, and surely matches your retirement goals better too.

Withdrawing a percentage amount (percentage dollars adjusted every year, to be same percentage) is much safer, is less dollars when fund is low and more when high, but 10% withdrawal even starting at First year does not fail here (but withdrawals that about match the growth rate also does not grow either).

There are several guided examples below. More money in the fund (after it grows) will always last longer, but technically, if no withdrawals, the fund does not go bust in the bad periods even if starting with only $300 in 1970 (the Lower Limit of $100 that defines Depletion can affect that test result).

Be sure to see Example 8 here to show the idea about first investing 30 years for retirement without withdrawals. Then the example shows retirement withdrawals starting in 2000 (even if 1973-1974 and 2000 to 2008 were particularly bad times in the market). 50 years is a long time, but the calculator can be started in any year. Retirement should plan on a prior 30 or 40 years of growth first, if possible.

The S&P 500 had 70 record high closes in 2021, but the last record high close before 2024 was 3 Jan 2022 at 4796.56 (this chart reached $5 Million then, end of 2021). But when the market is down, cashing in at that point simply makes the loss be real and permanent. So sit tight, and it always eventually recovers and continues growth. While it is low is the time to invest more, before that recovery gain.

Or see the S&P 500 daily market action, including the past S&P 500 record highs.

S&P 500 Index Fund 50 year calculator

Investment $  Start Year 1970-2026  Fund Fee %
  Reset settings to initial defaults ($25000 in 1970, withdrawals Off)

  No Auto-Scroll
  Auto-Scroll to S&P 500 result table at any active setting change
  Auto-Scroll to Depletion Test result table at any active setting change   (Only if Test is enabled)
  Auto-Scroll to S&P 500 result table at any active Example selection

Withdrawal Survival Depletion Test: Test Starts at every chart year.
 Fund Depletion is defined as Minimum fund value $
Omit Withdrawal Depletion Test
Include Depletion Test showing only depleted (busted) fund years
Include Depletion Test Starting in All Years

Withdrawal and/or Investment: (these are year end actions)
Limits all selected options 1-6 below if adding these year limits:
Start options 1-6 at or after Year   (runs bottom to top)
Stop options 1-6 after Year Overrides years at Button 5 or 6

Reinvest all dividends (shown in table in Black)
Withdraw dividends in selected action year range (shown in RED)

0 No Withdrawal or Investment (only the Initial investment)
1 Annual Withdrawal % (All Withdrawals are shown in RED)
2 Monthly Withdrawal $ per month
3 Withdrawal is the lesser amount specified at the 1 and 2 buttons
4 Add Investment $ per month (Dollar-cost averaging)
5 Add Investments in 4 until year , then withdrawals in 3

6 These (only one in same year) are in range of Action Start/Stop:

Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment
Year end $ Withdrawal   Investment

Any button, or pressing Enter in an active extra field, or this  will also compute the tables without resetting any option.

All data in all tables below are year end values (except 2026 is YTD)

S&P 500 Index History  13 February 2026 YTD Close

Price
Gain $		Dividend
$ 		Net fund
value $		Gain + Div
$		Div
% 		YearS&P Year
Close $		Price
Gain %
1.2120266836.17
1.2020256845.50
1.7120245881.63
2.0620234769.83
1.3320223839.50
1.8220214766.18
2.1420203756.07
2.6120193230.78
1.8620182506.85
2.4120172673.61
2.4220162238.83
2.1120152043.94
2.3020142058.90
2.7920131848.36
2.5920121426.19
2.1120111257.60
2.2820101257.64
3.0120091115.10
1.492008903.25
1.9620071468.36
2.1720061418.30
1.9120051248.29
1.8920041211.92
2.3020031111.92
1.272002879.82
1.1520011148.08
1.0420001320.28
1.5119991469.25
1.9119981229.23
2.351997970.43
2.701996740.74
3.471995615.93
2.861994459.27
3.021993466.45
3.161992435.71
4.161991417.09
3.461990330.22
4.441989353.4
4.211988277.72
3.221987247.08
4.051986242.17
5.401985211.28
4.871984167.24
5.291983164.93
6.791982140.64
4.821981122.55
6.651980135.76
6.131979107.94
5.50197896.11
4.32197795.10
4.691976107.46
5.65197590.19
3.25197468.56
2.71197397.55
3.351972118.05
3.521971102.09
3.91197092.15
2.86196992.06
Gain
$		Dividend
$		Net fund
value $		Gain + Div
$		 Div
%		YearS&P Year
Close $		Price
Gain %

Procedure: All years are year end data, except the current year YTD (meaning, the bottoms and highs may have been different, before being updated at year end). To avoid needing any count of shares, it is dollar based, this way: Each years initial fund value is the preceding year end dollar value, plus the percentage gain of the share price gain or loss, plus the percentage gain of the reinvested dividend (all based on applicable year end price, unless dividends are withdrawn), plus any deposits added during the year, less any withdrawals. Withdrawal percentages that are computed on the start of the year, so that is not precisely a real world happening if actually later in the year. Added contribution percentages are added at year end.

There is some unavoidable precision loss in this calculator. The the price and dividend gains are only 3 or perhaps 4 significant digits, so the 7 or 8 digit dollar amounts are approximations. The only reason I include the cents is that some might want to repeat the same calculations. The gains and dividends do have the year end annualized factual summary data, and the calculator does appear to be pretty close to actual final past fund results. The S&P funds match the same S&P dividend percentage proportionately. The "Gain + Div" column is just the sum of the years gains, but Dividend is not included in the fund if it is instead withdrawn.

All chart values are year end values except for 2026 being a incomplete partial year. We don't know the current years final dividend percentage until we know the end of the year price. Events within the year can be exciting, but some of the intermediate history and larger changes might be hidden, since only the year end is shown. For example, the 2020 Covid pandemic dropped to -34% in March, but recovered a new record high in five months, and was at +16% at year end. There was also a sudden -18% drop 12/24/2018, but it recovered in a week to only to a -6% drop at year end, and its rapid total recovery of course continued to new record highs over four months.

Fund expense fees may seem small, but that percentage is every year as it grows and compounds. Enter your S&P 500 Index fund fee as zero to see the difference it makes after accumulating many years. S&P 500 funds exist with a wide range of fees, but a very small fund fees are available and advantageous, and less expense is an earning plus. I like the Vanguard VFIAX fund, with a 0.04% fee each year, which is $400 fee when its value is one million, which is quite appealing.

Chart bottom summary row: Withdrawn sum values are shown in RED. Added values are black. Left side of bottom row are column Sums. On right side are simple price gains or losses (of individual years), of all rows 1970-2026, except 2026 which is an incomplete year. Annualized Return % are in the Depletion test of the year spans (shown in the Withdrawal Survival Depletion table next below). Just to be clear, columns 3 & 4 on bottom summary row may contain two lines itself. Note that column 1 and 2 (withdrawals) are very thin if empty.

Share price gain does not include dividends, but this table above adds them back in as reinvested. Withdrawn dividends are withdrawals, not counted as fund performance.

Trying to get your attention about Dividends

Among things new USA investors may not know yet is that it is very important long term to reinvest all stock dividends, because stock dividends are simply withdrawals from your own investment. Reinvesting it (putting it back into the investment) retains your previous investment value, and also becomes additional Free shares which will create large long term growth. These are very worthy goals at no added cost to you, since you simply restored your investment.

Stock dividends paid are ABSOLUTELY NOT NEW FREE INCOME, but if all dividends are reinvested, it will be more shares that will increase earnings. Stock dividends are simply withdrawn from your stock or fund, reducing your investment by adjusting the share price lower on that day by exactly the dividend per share price that was withdrawn (there are normally other market price gain changes every day too, but see the price adjustment. Yahoo Finance shows it at Historical Data on dividend day, only on the Weekly report).

Yes, you do pay income tax on the gains in it because it was unrealized gain (already earned) that you withdrew, and withdrawals do owe tax on the gains. But it was Not new income, you already had the gain, and the withdrawal is now taxable. The stock's company is able to transfer it and the tax responsibility to you, since it was already yours anyway. Dividends are a withdrawal. The only difference is that this withdrawal was not your choice, but it offers opportunity to reinvest it, which is a long term plus.

The gain will occur in all the future years after you put the withdrawal back into the investment. Set your brokerage option to automatically reinvest dividends. You will still pay the tax on the dividend, but the reinvestment will restore your prior investment value. Reinvesting it is a purchase (in this case just putting the withdrawn money back into your investment, no additional expense) which increases your cost basis so that amount will not be taxed again.

One purpose of reinvesting the dividend is to replace its withdrawal that would have caused the loss of future income gains. Another purpose is that it adds more shares that will make more money too (but is still not new income yet on that first day). There ought to be (and is) pleasure in reinvesting. The new dividend shares are FREE shares, since there is no additional cost, but the share price was reduced slightly so that it is still exactly the same previous total value on that first day. If you wait to reinvest, the price then may be higher, delivering fewer shares. Yes, the current share price is lower to exactly provide the purchase cost, but the price will quickly take care of itself, and without additional cost, your increased share count will accumulate and add additional gain. The long term compounding eventually becomes awesome.

Each dividend value is small, so you won't see a huge reinvesting difference in just a few years, but more shares added each quarter for a lot of years really makes the gains and compounding add up long term. You really need to see the chart below. If you don't yet believe this is true, it is, and you do need to believe it, so see my full song and dance. And for other details about the market, also try A few Market Things you need to know if you don’t already.

Bond funds are stocks and operate this same exact way. However directly held bonds are very different. See Google about Bond DURATION. See my Bonds page.

Fund Withdrawal Survival Depletion Test Results

The Test Mode computes starting an S&P 500 fund in many past years (computes 55 starting years with up to 1540 year situations if no depletion failures) and watches for the fund going bust due to specified withdrawals during past market crashes. The future is of course unknown, but this is what has happened in the past. Some market rules were added, but this can show the possible real effects to be ready for. The 1970s and 2000s were not good times, however we survived it, and the other years, and the last dozen years, have mostly done quite well.

The Lowest Year Value is of course typically near the starting year, but withdrawals or a later crash can lower it too. Every start year from 1970 on is shown, which can show overall fund gain results when starting any year (including any withdrawals or investments specified above). The future will be different, but we might expect similar events, sometime.

The Depletion Test shows results of All start years since 1970, but the calculator shows only its one start year. >But for example, if the Test says 2000 to 2008 goes bust, you can also run the calculator manually from any Start Year of interest (like that 2000) to reproduce the intermediate year details of the results of any start year failure.

The Annualized Return cannot be shown if partial year 2026 year is included. Annualized Return is the hypothetical calculated Fixed interest rate that computes the same exact result (accurate, except it did not actually happen that way, but the result is the same) so as if that same Fixed interest rate were paid in each of those years (like a fixed interest bank account, for comparison purposes). The compounding will produce the same total final dollar result. It makes a more comprehensible comparison than the mixed market reactions. The Annualized Return excludes the value of any withdrawals (if any) during the span of years (but see the chart below).

Annualized Return % is what you want to see, it works like we imagine that Average Return might work, but doesn't. Average is about individual years, but Annualized Return includes compounding of spans of years. But will be inaccurate if the incomplete current year is included.

NOTE: 2026 is not yet a complete year, and its Annualization must be omitted from the Depletion Test, because Annualized Return shown requires complete years. Each year uses their year end result individually, but spans of full years are compounded over the years. Starting 12 months back from current date is a complete year, but annualization of YTD from 1 January is accurate only once on 1 Jan of next year.

Any withdrawals and the starting investment are as currently specified in the calculator above. And then the Total Value field is the sum of the withdrawals and final fund value. Withdrawal columns are not shown in table below if none.
Note that an annual withdrawal will be included in every starting year span that includes that year, so it might look worse than it is. Each line in this table is a new starting year situation.

S&P 500 Decade Summary

Here's a summary of S&P 500 Gain History since 1970. Even if 2022 performance lessens the effect (the 2000's decade was worse, but the market has always recovered), do see Example 4 below for a realistic view of maybe best case of a $25K investment (S&P 500 growth for 30 years, followed by $5K per month ($60K per year) withdrawals continuing in 25 years of retirement). It's a "Decade Table" in five and ten year periods. The top row 2026 is an incomplete partial year. Just the two years 2020-2021 computes 23% Annualized gain, which was real good, but 2022 was not. Yet long term always recovers and keeps on growing.

S&P 500 gains and annualized gains from $25,000 in 1970,
with reinvested dividends, and no withdrawals

"Anualz Gain" spelling is just to reduce the screen width. It is the Annualized Gain that computes the Fixed gain rate that is the SAME overall gain result AS IF it were this FIXED rate gain every year. Annualized gain is easier understood than the markets mixed gains, and is the exact Same Gain Result in the same time period.

The last right-hand Annualized column is not each 5 year line, but is the accumulation of all the years from 1970. The S&P 500 Index shows just the share price gain, but reinvested dividends are included here.

The first half of the 1970s, and the 2000s decade, were an ordeal to suffer through (and were lost years market-wise), but then when corrected, the times got great. 2022 was also quite bad. But long term recovers and has been impressive.

Percentage Gain =
New value - Old value
Old value
× 100 %

% Annualized gain = ((1 + Percentage Gain/100)1/n years) - 1) × 100
Is the Fixed gain each year that gives the Same Equal Gain Result in the Same Time.

The fixed Annualized gain is not the way it actually happened, but it is the smoothed exactly same result in the same time, which is good for comparing gains. Because the Fixed rate Annualized gain is more understandable than the varied market gains, some years up big, some smaller, and a few years even negative loss. That makes it difficult to understand what actually happened. The overall Total Return percentage gain is what actually happened, but how many years did it take? The Annualized rate factors in the years of duration for an understandable result.

All this S&P 500 data is history, Not the future, but it has actually happened, and some of it possibly could happen again. The -11% and 2% five year dips shown are at the ending value of the five year periods. The worst of those multi-year negative dips reached about -50% in 1973, 2000, and 2008, but recovered somewhat by the end of the five year interval shown in this table. The bottom on 12 Oct 2022 was -25%. Much better financial rules seem to be in place now to help the market now, but all five year periods are Not alike, and some could include bad market times (it is called "risk" and we do have politicians in Congress interested in getting votes). Still, if it is a worthy investment, hang in there, it does routinely recover, always has, with good gains long term. Even with a few seriously bad years, if without withdrawals, the cumulative long term compounding effect should be evident and mighty impressive.

Retirement: Maybe 30 or 40 years seems a long time away, but if you're young, you have a long time. Don't waste it. Nevertheless, realize that the need for money will still be extremely important during your retirement. Because retirement typically means no more job or salary, so you will need planned investment savings to live on. You might have maybe 20 to 30 more years during retirement too, but the early investment grown large can continue growing during retirement too. So realize retirement age is definitely coming, and planning for it now would be very wise, and maybe allow travel and cruises then too. There are obvious advantages of having sufficient money during retirement. You might be able to plan for this in later life, however the compounding of many years of Time will be your overwhelmingly Best Investment Tool, or your Worst Wasted Loss if you ignore planning it now. So start now while you still have time for it to work great. It will be too late after you need it. Realize the importance of the goal, and keep your eye on the prize. Bigger plans are possible, but an easy way is that if just $10,000 were put into a S&P 500 Index fund (for example VFIAX) in 1980 (45 years ago) and left untouched (during good times and bad), it would be a couple of Million now, in spite of a few seriously bad times (S&P does always recover). The time takes care of it. The best plan is to start early and leave the remainder alone and withdraw nothing else until retirement needs make it necessary. Of course, adding a little to it all along is a very good thing too (especially if in down markets, to buy low).

The Message again: Start Very Early, decades before you will need money for retirement. And until retirement, leave it untouched and working.

Withdrawals (including Dividends) are a Huge long term Cost

Speaking here of STOCK or Fund dividends, NOT of dividends from directly held BONDS (meaning, not in a bond fund). Bonds pay an interest rate on the face price of the bond, but stock dividends come from the company's value. The stock dividend is that the company or fund has earned profit, and you as a stock owner are receiving a distribution of profit, which then reduces the company's value and stock price by the same amount.

How Stock and Fund Dividends Work

It's a huge mistake to think of stock dividends as New income to be withdrawn, because it is certainly not. Dividends are already withdrawn from your fund, and now "withdraw" of dividends just means to send it to you. Stock and fund dividends are instead simply a withdrawal of your own prior gains. That withdrawal becomes realized gain (distributed to you) and is taxed each year (is taxed if "withdrawn" or not, because it was already withdrawn from your fund). The withdrawal increases the existing investment cost value by the same dollar value (so that amount will not be taxed again). The dividend is simply a withdrawal from your earned investment. But dividend reinvestment will put it back (as additional free shares) to keep the same investment value. You should know the whole picture.

The same is also true of bond fund dividends, however dividends are Not a withdrawal from directly owned bonds, which pay simple interest and are redeemed at maturity at the full face value that was purchased.

A company's publicly held capitalized value is their number of existing stock shares multiplied by one share's price value. Mcrosoft and Nvidia's stock value this way each computes to be $4+ Trillion. The idea of the dividend is to distribute some of the company profit to the stock owners as "realized gain". The dividend money paid out (as a few dollars per share) was subtracted from the company's value, as a cash payment to you. This withdrawal reduces the company's value by millions, so the stock price (which reflects the remaining value of the company) is automatically and equally reduced by the same dollars per share when the dividend is paid. Due to that corresponding stock price drop, your value sum (of the paid dividend and your remaining stock value) remains exactly the same sum value as before the dividend, i.e., there is no gain on that day. Yes, the stock price did drop, and the fund value dropped, but you did not lose anything either — You already owned that stock distributing the dividend, and you do have that cash difference now (in your pocket, no longer in the stock value). It was simply a withdrawal, leaving a reduced remaining investment. There is no gain and no loss, not from the dividend on that day, but future gain will be reduced. The distribution was just from the company's stock value that you already owned before, but now is instead transferred to your cash. The best and most optimal thing to do is to reinvest that dividend, which retains today's fund value, and it will also become additional shares for greater future compounded growth.

Dividends are NOT New income. Dividends are simply a withdrawal of some prior unrealized gain, reducing your fund value by the same dollar amount. But if reinvested, then each 1% dividend gives you 1% new free shares (like 4 times a year), which is a huge long term plus.

Another page here has much more detail about stock and fund dividends. It also tells the way you can reinvest stock dividends.

Compared to "What Could Have Been if still earning". Withdrawals from funds, including dividend withdrawals, can cost much more loss long term than you might imagine, and might even be a fatal bust in bad market times. True of any withdrawals, but the setup of selecting dividend withdrawal likely continues forever unchanged. You might enjoy receiving a small withdrawal a few times a year, but should be horrified when you realize the actual total cost lost easily can reach many times what you received.

This next example is the S&P 500 Index fund started with $25000, from start of the year shown to 1/4/2026. It is without any additional investment, and investing a little more all along is a fine plan (see Option 4), but the reinvested dividend also adds a few free shares each quarter. S&P 500 dividends vary but the ballpark is maybe 2% a year, but it is every quarter of every year. The really big thing is that the growing investment becomes a large value long term. Data is from the S&P 500 table above, including 2026.

Withdrawing dividends (WD) is extremely costly to the long term fund income

End date of each row is the current 2026 YTD.

S&P 500No withdrawals Overall Cost of Withdrawing all Dividends
$25K
Start		YearsFund Value
No WD		Dividends
reinvested		Fund Value
after WD		Dividends
Withdrawn		End Value
Fund + WD		Cost to
Withdraw

The cost of withdrawals (WD) is the money "that could have been" (if left reinvested), which is minus the dividend amount, and minus its future earnings when withdrawn. Especially if you are investing to provide later retirement income, this withdrawal cost is very counterproductive, which is quite important to realize now.

You can easily see the result yourself, just click Withdraw Dividends in the calculator above.

Here are some obvious thoughts. Yes, 50 years is a long time, but many of you can easily do 20 or 30 or even 40 years. Plus retirement for many lasts 30 years longer (say to age 95), while the investment is still growing. The closer that retirement gets, the scarier loss of salary can get, meaning today is the day to start planning for it. That certainly should be your retirement plan and goal too, to be able to live comfortably 30 years with no salary. So always reinvest all dividends, to keep restoring and maintaining your investment value, which will compound to your final value. And start preparing retirement income a few decades early, TODAY IS THE BEST YEAR REMAINING. And adding a little more all along too is helpful too. Death and taxes are the sure things, and retirement normally comes before death, perhaps a long retirement. Do you have plans for that? Your best investment tool is to plan to use the many long term years of compounding that might be yet available. The numbers here are the actual past market results as a guide, and depending on future election results, the future market results are looking even better.

Age 35 has 30 years (to plan retirement at 65), and age 25 has 40 years, if they are wise enough to start today while they have the years. And of course, it also will also continue to gain during retirement. But if withdrawn quarter after quarter, the withdrawals reduce the fund's future worth, which then also very seriously reduces your future long term net worth capability. Sure, other things will always seem financially important, but retirement income will become extremely important then, when it is too late. There are always alternatives, living under the bridge on the streets works for some, but a better plan is desirable. One good plan is to put some money into a S&P 500 fund (one with low fee costs), add more money to it all along, and don't even think about touching it until retirement. Sure, you could become rich and able to afford it later, but the way to bet is to start today, just in case. Retirement with no salary will happen, whether your wealth happens or not.

The quarter after quarter of reinvested dividends add free shares (at no additional cost) to continue compounding the earning even in retirement. There are usually 120 dividends in 30 years. Planning retirement income should be a major plan, easier if done early when it works best. Young people will have other things to think about, and may not yet realize that years of retirement without any salary likely will come their way, but I assure you it will, and can become very scary (when it is too late to help it), and Now is the easiest time to prepare well for it, before it is too late. Or we could die at age 50, but the odds are against it, and longer plans need earlier planning. Time is your best tool, plan to use it wisely. Retirement could last 30 years, and accomplishing a few million dollars will come in extremely handy and comfortable then.

This calculator shows that investing only $100, and adding $100 a month without fail, would have grown to $638K in 30 years, and to $2.8 million in 50 years (without any withdrawals). And we had some tough times in those years too. It will make a huge difference to do that in a ROTH instead of an IRA or 401 (which just becomes an IRA). You can always add more too. An IRA pays regular income tax rates on all of it, 100% of it (every penny) withdrawn, where a ROTH is tax free. It is best if either of them are a self-directed account, where you can invest as you please. It is when the fund gets large that the compounding really kicks in. Doubling $1000 is only $2000, but try doubling a million or two. My hope is that people that have Never given it a thought might wake up and make some plans for the certain future while there is time. Try to be smart about it, and a good part of that is to know that time is your best tool.

This also applies to any stock or fund, and any continual withdrawal. Withdrawals are the intended plan during retirement. Perhaps there could be true necessities requiring withdrawal before retirement, but withdrawals before retirement come at a high cost long term.

Long term, reinvesting dividends is a major part of S&P earnings. THE major part depending on definitions. That ought to get your attention. Do you really need to withdraw that (maybe about 2%) dividend each year, or would it (and its compounded future earnings) be better used at retirement? You might not be aware how very expensive that gets long term, but it certainly does, and there are choices. Reinvesting the dividend would add its additional shares every year for considerably more growth every year, greatly affecting final income for retirement. The exact gain values depend on market performance in the past decades, but that's true withdrawn or not, so the degree of cost of Withdrawal Loss depends on the years of duration of the compounding gains.

Do Not imagine that withdrawing dividends is obtaining new income. It's just a withdrawal of your own money from your fund. Withdrawing dividends lowers the fund value, same as does any withdrawal. In case it is not obvious enough, withdrawals also reduce all future gains. A dividend is just a withdrawal of same amount. A withdrawal might be a serious necessity once in a Blue Moon, but continuous withdrawals are too expensive, except in retirement when that is the whole intended need and planned purpose. The reported year gains can only compute the same numbers the same way. Every single digit in this table is the same for any withdrawal of the same amount. The compounding of the fund gains does work well if having the dollars to work with.

But withdrawing dividends is different from simple withdrawals, because reinvesting dividends does add free shares. The dividend also reduces stock price proportionately (reinvested or not), but reinvesting compensates with the new shares, Not changing the fund value on that first day. Simple withdrawals do change value, removing shares, permanently. Reduced price by dividends and reduced shares by simple withdrawals are (if same withdrawal amount) the same fund value that first day. However price does continually vary but shares don't (usually), so the difference in the future is large.

So if you're going to invest, then do that, and leave it there until retirement, and watch it grow.

Fund Fees: The fees are also a continuous withdrawal. Try entering your fund fee as zero to see the difference that compounding of lost earnings cost there. Be sure you are entering the correct fee for your specific S&P fund (fees do vary significantly). The cost of the fee every year is much more than just the fee. It also continues to cost the lost earnings on it every year, compounded over the years. You definitely want to find a low fund fee.

The compounding over many years makes the long term expense of regular withdrawals become extremely high, compared to "what could have been". As the withdrawal percent increases, the fund value decreases so then it earns less, and so the dollar amount of any percentage withdrawal total also drops. The 2% case is comparable to just withdrawing all the S&P 500 dividends, the effect is the same. It should be a sobering thought. I don't mean to be preachy, but awareness is my goal. At least evaluate the actual need first. Just because it is there seems the worst reason to withdraw it. The best reason for withdrawals to wait is that your need is likely greater at retirement time. A common purpose of mutual funds is of course for the withdrawals to support retirement, but that idea is to first invest for 20 or 30 years without withdrawals to build up the fund, so you can have something to withdraw in retirement. You can take action on that NOW. Do realize that you are not simply subtracting the withdrawals. The big deal is that you are also subtracting all the years of compounded gains those withdrawals could have earned (which is a hugely larger number). The better idea is to let the fund accumulate something first. See Example 8 below.

The magic of the gains is that the growth is compounded, with the gains earning more gains, year after year, increasing dramatically after a couple of decades. But continuous withdrawals are a real big thing affecting a fund, reducing the gains and the compounding, again over many years. If you withdraw more, you get much less. You can see the result yourself in the calculator above. Imagine investing $25,000 one initial time in a S&P 500 fund for 50 years (historic S&P 500 data from 1970). That span could be at your age 25 to 75. If you're young, you need to realize those many available years are the huge magic opportunity, which diminishes if you wait. Just ten years might be impressive, but 50 years is simply awesome.

Just to be clear, withdrawals during retirement are certainly an expected main purpose of the market funds, but earlier withdrawals are detrimental to that possible "what could have been" retirement income. This is especially true during long term, when the compounding can make so much difference. <

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One purpose of these examples is to show some of the controls possible in the calculator, but the really big point is that if no withdrawals, 50 years of S&P 500 gains will be absolutely awesome. Retirement time will come, ready or not, and you need to realize that you should get started on it NOW. Time is the tool that works, but if you wait too long, this huge opportunity diminishes.

Guided Examples of Using the Calculator

If not withdrawing, the fund will not go bust (but could go below your minimum). Very bad times in the past have dropped it to near 50%, but not to very near zero. Hopefully some newer market rules will help. That will certainly be very worrisome then and requires waiting for its recovery, but if you let it ride, it will recover, but retirees may not have that option. The market has always recovered (but which sometimes could take a year or two). But withdrawing it then just makes the loss real and permanent. The S&P 500 companies are very well established, and it will come back. Following here are a few examples of that in the last 50 years.

This is looking at some choices with investment starting with $25,000, to show the good effect of minimizing withdrawals. The example results are more in agreement with the 2026 totals, but it has been nearly a year and the market has grown. But the point is still the same. The exact result values in these examples will vary from the last 2026 result entered in the calculator chart (the text in these examples below is Not updated with every days current price change, but the calculator itself will recalculate from the last price entered.) You can of course then adjust the values to fit your goals. Again, these results are computed from the past years in history, and future results are not known. The standard qualifying words are: Past performance is no guarantee of future results.

Examples 1-10:

1. Start at 1970: (55 years until today) If with no withdrawals of any kind, $25K grew to $9+ Million today. This is the pages initial default case. The message is: Start your investing early. It will be all-important when you near retirement age.
So try some things in the calculator. Bad years are survivable, but withdrawals may not be. (Again, the future is unknown.)

  1 Show this setup in calculator (Example 1 just restores the initial chart).

2. However, withdrawing all dividends (from $25K start, but never setting up reinvestment of dividends) instead reduces gains of less money working, which seriously drops to "only" $1.7 Million, plus $412K withdrawals (instead of $9+ million if no withdrawals). That result is an 85% loss of the gains possible, and is same as an annualized loss of 3.3% every year. That was over 55 years, but DO NOT ignore the long term importance of reinvesting dividends. The dividend may be small, like maybe 2%, but it repeats and compounds and grows, every year. And this certainly also applies equally to any and all withdrawals, which are very nonproductive long term.

  2 Show this setup in calculator

3. Or instead of dividends, continuous withdrawal of $100 per month (totaling $65K in 55 years) dropped the fund to $17K in 1974 (which was particularly bad times), but it survived, and grew to $2.9 Million in 53 years. However that $65K of withdrawals cost $3.5 Million of the gains in example 1 (over 53 years). Perhaps you might have only 30 years to invest until retirement, but then you might also still have 30 years of retirement too. Give that some thought concerning withdrawals. However withdrawing anything so early is far from wise. The fund needs to build more money to survive bad times.

  3 Show this setup in calculator

A few more things you might see here about how things work.

While it may not be intuitive during the bad times of gloom and doom and worry about the market, but actually, those low points are exactly the right time to be adding more money then (to buy low), making recovery gains grow dramatically. The low points would be the worst time to sell it off. It recovers, but it could take a year or two.

4. This might get your attention... a more expected procedure. 30+ years S&P 500 investment followed by 22+ years of $60K per year withdrawals in retirement.

Continual withdrawals beginning Day One is NOT a normal plan. To make the fund count with greater gains, let it build for many years until retirement time, and only then start withdrawing to help replace salary. Or maybe if already retired and you have some savings that are not earning anything, but need it to help with immediate withdrawals for living expenses. The S&P is capable with higher gains that have averaged about 10% a year. Some years more, and some years less, and some even negative several times. And BIG negative (near -50%) a few times. Again, the S&P 500 is the stocks of the 500 largest USA companies, relatively safe IMO. Market crashes can certainly still occur, but they always recover eventually. But when moving savings, do realize there is market risk, stocks can lose value (and unless it is IRA or 401, moving is likely a taxable event).

  4 Show this example in the calculator

But always check the Depletion test. This example does go bust at 4 start years near 2000. But deferring these withdrawals even five years supports the withdrawals to make a big difference.

This past data includes several really poor years (possibly typical), so caution is advised in the future real world. This idea is to let it grow to a substantial value before starting withdrawals, and then keep an eye out on the gain of future years then. If the average gain is keeping up with the average withdrawal, it will work. The average S&P gain has been near 11%, but 2000 began three years averaging about -15% (which then of course still did recover). Starting 1970 looks real good, but the Test shows a few failure starting years around 1997 (because the new fund had not grown much before the bad years starting at 2000).

5. An IRA account has a $6000 annual contribution limit, which increases a bit every few years. This example starts Dec 31 1979 with first $6000, and then continuously add the maximum tax-free contribution of $500 per month ($6000 per year IRA limit until 2004, contribution totaling $150K in the 25 years). It grew to $1 million in that time (which included the 2000s decade), and to $5.9 Million in the next 22 years until now. There will be a lot of tax owed on the IRA (regular income tax rate too, no capital gains in IRA), but you would like that at retirement time, it certainly seems worthwhile. If it were Roth, it would be tax free and also allow larger contributions.

  5 Show this setup in the calculator

6. Start at 2000: About the worst staring year, the entire 2000 decade were poor. But Buy low, when it is down, except it gets worse and more attractive in 2008. The 2000s were really bad times with two severe crashes in the decade (2001 and 2008), so bad it didn't recover until 2010. But if no withdrawals of any kind, $25K still grew to $124K today, which is not too shabby, about 5x, and 7+% Annualized Return (even starting in 2000). And the Test result shows this same thing (as no withdrawals), starting in every year, same $109K if starting in 2000.

  6 Show this setup in the calculator, starting at about the worst time.

But then instead of withdrawing anything, adding more money at the low points is the special opportunity to see dramatically greater gains in the recovery. Adding $25K more in 2002 (doubling original investment when price was down about 40%, and things looked so bad) would total $282K in 2021. We can't time the bottom, so had this been the plan, you'd done it earlier, and continued adding all along.

7. Start at 2009: (12 years) These were the better good times, building from the previous 2008 lows, and if with no withdrawals, $25K in 2000 grew to $165K in about that time. But economic and political pressures can hurt the market, so there is always risk. But so far, the market has always recovered and continued the gains.
  7 Show this setup in the calculator

Perhaps of the most interest to the concept, 8 and 9 are results of two of what turned out to be the worst-timed bad investment times (unavoidable because the future is unknown. But it does recover.)

8. Start a $25K investment at 1973 right before the 1974 crash and see it drop 40% then. But don't touch it for 51 years, and then start withdrawing 8% in 2000 (just in time for a really BAD decade, which turned out to be some of the worst scary times, but your fund had resources by then to withstand it). So from 2000, start 22 years of retirement withdrawals totaling $1 M, varying widely but averaging perhaps about $42K annually (about $3500 monthly, but varying). And it still leaves about $670K remaining today, maybe for inheritance (often a goal). The entire cost to you was the original $25K (this is past history, it cannot predict the future, but there are better times than this example hits).

  8 Show this setup in the calculator

However, the abnormally large 9% withdrawals in the first three years of the 2000 downturn were detrimental. But if instead of 9%, try withdrawing a fixed $4000 a month (button 2, starting at year 2000 again) works if starting in 1973, but this fails early if not starting until the 1980s. Or limit it a bit by doing both, but limited to the smallest option 3, which leaves more in the fund. A large fixed withdrawal in a small fund hits the down years heavy. Whereas a reasonable percentage (assuming dollar amount is readjusted each year) is a smaller withdrawal in those down years. But even $200/month starting at Day One (when fund is small) fails several starting years.

But also try Option 3 then. A good plan is to use button option 3, with say BOTH of the same 10% and $5000 withdrawals in Option 3 as limits on each others extremes, which might limit a few years to be a little less, but which lets it build more, and then it runs in all years without failure. And it leaves quite a lot to provide inheritance. A percentage withdrawal may not be so much when the fund is low, but it won't go to zero and fail (if withdrawal dollars are adjusted accordingly each year). We can't know the future, but the total of all the many years is the really huge effect.

9. Start investment at 2000 right before those crashes. Start withdrawing 6% in 2003 (right after the first crash), which is 20 years of withdrawals totaling near $28K for average of about $1.4K annually, with $40K remaining today. The last decade (2010s) saw good market growth, doubling in spite of the withdrawals. This growth time is short, but starting with 2x more money would have 2x greater results. To get that greater money (still trying to get your attention), simply starting ten years earlier would have made the 6% be near $6K average annual income assistance, with $175K left. Or 20 years earlier would be about $29K withdrawals with $850K left. Or 30 years earlier for $51K withdrawals with $1.5 Million left. Time is the awesome tool.

  9 Show this setup in the calculator

10. Starting the fund just before bad years is Not the best plan, but we can't know the future. It is only shown as a worst case. But one example that works anyway. Start in 1970 with $25K, and then with button 5, contribute $500/month until 2000 ($186K more) when worth $500K, and thereafter withdraw $4000 a month ($48K a year for $1.2 million, but limited to 10%), which still remains worth nearly $321K then Except if it were are an IRA, the large gain would surely make the RMD be greatly higher.

  10 Show this setup in the calculator

These are just some examples from past history, but it is suggestive of the way things work, and the things that possibly (or typically) can happen in the future. There are noticeably more good years than bad, and the S&P 500 has always averaged about 10% annual gains, but there are a few down years. The bad times might last a year or two, and might drop 50%, but they have always fully recovered (2009 was special and took several years though). Withdrawing the money when it is down in bad times is the worst thing to do, because it absolutely guarantees that the loss becomes real and permanent. Instead adding more investment money when the market is low is a great opportunity offering large gains when the price recovers (buy low, sell high). Hang in there, stay the course. It can seem dark and gloomy and fearful at the time, but withdrawing all money then ends it all (and makes the loss very real). But the market has always recovered to continue the gains.

Also see next pages:

General info describing S&P 500, the market, the 4% Rule, dividends and bonds, etc.

Compounding and Annualized Return, and calculators

Stock Dividends are valuable, but withdrawing them is Not new income

S&P 500 daily Action, and Count of annual S&P 500 record highs

Copyright © 2020-2026 by Wayne Fulton - All rights are reserved.

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