Mutual Fund/Savings Compounding Power

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Inputs — save for N years, then draw an income

Table Enter Below ↓

How the tax works

Only the gain inside a withdrawal is taxed. The part that is your own contributions coming back is never taxed again, so every withdrawal is split pro-rata between the two — the same way a brokerage reports it. The income you enter is what you actually receive, so the withdrawal is grossed up to cover the tax.

Results at year 40

The bucket — fills while you save, drains once you draw

Year 1
The account as a water bucket Contributions pour into the bucket while you are saving. Once the income starts, a tap on the side drains the bucket every year — the income you spend plus the tax on the gain — and the water level falls until the bucket is empty. Contribution in No more contributions Income out $0 Balance left

The water level is the balance from the table below, on one fixed scale that never changes as the years run — so the level moves only when the balance does. Every withdrawal takes out more than you receive, because the tax on the gain leaves the bucket with it.

Balance over time

Year-by-year schedule

Type an amount in any Contribution cell and it fills every year below it, up to the last contribution year. Outlined cells are the ones you set.

Year Contribution Income taken Tax paid Withdrawn Interest this year Balance

Contributions and withdrawals happen at the beginning of the year; interest is credited at the end, so the balance shown is the end-of-year value. In the final year the account may not hold a full withdrawal, so the income for that year is whatever is left. Negative rates are allowed to model losses.