Perhaps the most important concern for a retiree is how long the nest egg will last. Figure 2 examines the effect that the annual withdrawal and interest rate have on investment horizon. At these points, the nest egg accrues interest faster than inflation, taxes, and withdrawal strip it away. The investment horizon is at least three generations away, if not infinite. Unless a retiree is creating an endowment, these values are too extreme.
Interest is raised to the t power.
Since smaller withdrawals deplete the principle at a slower rate, the power of t is increasingly influential. Figure 3 shows a plot of investment horizon and withdrawal. The scatter plot has a noticeable curve. The linear trendline has an R2 of .44 and clearly is missing a key point. The non-linear power form is a much better estimator with an R2 of .77.