How Long Will My Retirement Savings Last? Calculator & Analysis
Calculate how many years your nest egg will sustain your retirement lifestyle.
Key Takeaways
- 1At a 4% withdrawal rate, savings should last 25-30 years historically
- 2The three key variables: withdrawal rate, investment returns, inflation
- 3Sequence of returns risk can shorten portfolio life significantly
- 4Social Security and pensions reduce what you need from savings
- 5Healthcare costs often spike in later retirement years
- 6Planning for 30+ years is prudent given increasing life expectancy
- 7Flexible spending strategies extend portfolio longevity
The Quick Math
A simple rule of thumb for retirement savings longevity:
- **Without investment returns** - Simply divide savings by annual withdrawal
- **With returns** - Money grows while you withdraw, extending life
- **The 4% rule** - Historically survived 30 years in 95% of scenarios
| Withdrawal Rate | Expected Portfolio Life | With 6% Returns |
|---|---|---|
| 3% | 33+ years | Likely indefinite |
| 4% | 25-30 years | 30+ years |
| 5% | 20-25 years | 25+ years |
| 6% | 17-20 years | 20-25 years |
| 7% | 14-17 years | 17-20 years |
Key Variables That Determine Longevity
Three factors determine how long your money lasts:
- **Withdrawal rate** - How much you take out annually (as % of starting balance)
- **Investment returns** - What your remaining portfolio earns
- **Inflation** - How much your expenses increase each year
- **Sequence of returns** - When the good/bad years happen
- **Social Security/pensions** - Reduce what you need from savings
Real Examples: How Long Will $X Last?
Common scenarios assuming 4% withdrawal rate + 6% average return:
- **Note**: These assume disciplined 4% withdrawals and average returns
- **Bad sequences** can shorten these significantly
- **Inflation adjustments** may require higher withdrawals over time
| Starting Savings | Annual Withdrawal (4%) | Expected Duration |
|---|---|---|
| $250,000 | $10,000/year | 30+ years |
| $500,000 | $20,000/year | 30+ years |
| $750,000 | $30,000/year | 30+ years |
| $1,000,000 | $40,000/year | 30+ years |
| $1,500,000 | $60,000/year | 30+ years |
| $2,000,000 | $80,000/year | 30+ years |
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What Can Shorten Your Portfolio Life
Factors that may cause money to run out faster:
- **Early bear market** - Sequence of returns risk (see related article)
- **Higher inflation** - 1970s-style inflation destroys purchasing power
- **Overspending early** - The "go-go years" trap
- **Healthcare costs** - Often spike dramatically in later years
- **Long-term care** - Can cost $100,000+/year
- **Living too long** - Sounds good, but 40-year retirement tests any portfolio
- **Low returns** - Current low-rate environment challenges historical assumptions
How to Extend Your Portfolio's Life
Strategies to make your money last longer:
- 1**Flexible withdrawals** - Reduce spending in down markets
- 2**Part-time income** - Even $10,000/year significantly extends savings
- 3**Delay Social Security** - Each year delayed = 8% higher benefit
- 4**Downsize housing** - Reduce expenses and unlock home equity
- 5**Tax efficiency** - Proper withdrawal sequencing saves thousands
- 6**Diversification** - Include non-correlated assets like gold
Using a Retirement Calculator
What to input for accurate projections:
- **Current savings** - Total across all retirement accounts
- **Annual expenses** - What you actually spend (not income)
- **Social Security** - Expected benefit at your claiming age
- **Pension income** - Any guaranteed income sources
- **Expected returns** - Be conservative (5-6% real return)
- **Inflation assumption** - 2.5-3% is reasonable
- **Retirement length** - Plan for 30-35 years if retiring at 65
Averages Lie
Calculators using "average returns" can be misleading. A 10% average return with bad sequencing (early losses) will deplete your portfolio faster than the same average with good sequencing. Always run multiple scenarios and plan for the worst.
Gold Can Extend Portfolio Longevity
Physical gold helps protect against the factors that shorten retirement:
- Maintains purchasing power during inflationary periods
- Often rises when stocks fall - mitigates sequence risk
- Tangible asset that doesn't depend on financial system
- Can be sold strategically in stock market downturns
- Provides true diversification beyond stocks and bonds
Frequently Asked Questions
1How long will $500,000 last in retirement?
At a 4% withdrawal rate ($20,000/year) with 6% average returns, $500,000 could last 30+ years. But this depends heavily on sequence of returns, inflation, and your actual spending needs. Add Social Security for a more complete picture.
2What withdrawal rate is safe for a 30-year retirement?
Historically, 4% survived 30 years in 95% of cases. Some experts now suggest 3-3.5% given lower expected returns and longer retirements. Flexible withdrawal strategies (reducing in down years) improve success rates.
3Does Social Security affect how long my savings last?
Dramatically. If you need $50,000/year and Social Security provides $25,000, you only need $25,000 from savings. This effectively doubles your portfolio's longevity compared to funding the full amount from savings.
4What if I live longer than expected?
Plan for longer than average. If you're healthy at 65, plan for 30-35 years. Consider income annuities for longevity insurance - they pay no matter how long you live.
5How do I account for healthcare costs?
Healthcare costs often increase with age. Build in 5-7% annual healthcare inflation vs 2-3% general inflation. Consider long-term care insurance or dedicate a portion of savings specifically for potential care needs.
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