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It means living off only the income your investments produce — things like interest, dividends, and cash yield — while leaving the original savings (the "principal") untouched. Because you never spend down the savings themselves, in theory they can last indefinitely and pass on to family or causes you care about.

Principal is the pile of money you have saved. The income is what that pile earns each year — interest from bonds or savings, dividends from stocks, or rent from property. This strategy spends the earnings and keeps the pile whole, rather than selling pieces of the pile to fund retirement.

People who have saved a large amount and value safety and leaving a legacy over retiring at the earliest possible age. Because you live on earnings alone, you generally need more saved than with a drawdown approach — but you get the peace of mind of never watching your nest egg shrink.

Often, yes. Living on earnings alone usually requires a bigger savings target than spending down your portfolio would, so the earliest possible retirement age tends to be a little later than with Portfolio Drawdown. The trade-off is durability: your money is far less likely to run out. You can compare the exact ages across all three strategies here.

Use a realistic, conservative figure for what your investments pay out each year, and remember that inflation slowly raises your spending over time. This calculator lets you set your own yield and expenses so you can see the earliest age your earnings cover your costs without touching principal — then stress-test it with lower numbers.