The withdrawal rate is the rate at which you withdraw money from your nest egg (portfolio) after you retire. For example, your portolio may earn an avg annual return of 7%. But you decide to only with draw 4% each year and reinvest the remaining 3%.

If you save $1 million and withdraw 4% each year you will get $40,000 to spend each year.

If you save $1 million and withdraw 3% each year you will get $30,000 to spend each year.

The calculator assumes your current expenses are the same as your expenses after retirement. I generally want to live have the same standard of living after retirement as I do now.

So if you spend $40,000 a year want a withdrawal rate of 4% you will need to save $1 million to retire. If you spend $40,000 a year and want a withdrawal rate of 3% you will need to save more than $1 million so it will take you longer to retire.

You can read more about withdrawal rates here:
http://blog.networthify.com/withdrawal-rates/