How Long Could My
Retirement Savings Last?
Understanding the factors that may affect how long your retirement savings could support your income needs.
Why This Question Matters
Retirement savings are intended to support your financial needs over a period of years. Understanding what may affect how long those savings last can be an important part of retirement planning.
Your Income Needs
The amount you expect to spend in retirement can influence how much you may need to draw from your savings over time.
Your Time Horizon
Retirement may last for decades. The length of time your savings need to support you is an important consideration when thinking about withdrawals and investments.
What Can Change Over Time
Inflation, market performance, taxes, healthcare expenses and changes in spending can all affect the amount of money available to you over time.
There is no single number that can tell you exactly how long your retirement savings will last.
Retirement planning involves considering multiple factors and how they may interact over time.
What Determines How Long Your Savings May Last?
The answer depends on more than the amount you have saved. Several factors can influence how much you withdraw, how your savings change over time, and how long those assets may remain available.
How Much You Spend
Your retirement spending needs can have a direct effect on the amount you need to withdraw from savings. Higher withdrawals may reduce the amount remaining more quickly.
When You Retire
The age at which you stop working can affect how long your savings may need to provide financial support. An earlier retirement may mean a longer period of withdrawals.
Investment Performance
The value of investments can rise and fall over time. Market performance can therefore affect the amount available when withdrawals are being made.
Inflation
The purchasing power of money can change over time. If the cost of goods and services increases, maintaining the same lifestyle may require more income in future years.
Taxes & Other Costs
Taxes and other retirement expenses can affect how much of your savings is available to meet your spending needs.
Unexpected Expenses
Healthcare expenses, home repairs, family needs and other unplanned costs may require additional withdrawals from retirement assets.
One factor rarely tells the whole story.
These factors can interact with one another. A change in spending, market conditions, inflation or retirement timing may affect the overall picture. That is why retirement income planning is generally more than simply dividing your savings by an annual withdrawal amount.
The Impact of Withdrawals
How much you withdraw from your retirement savings—and when you withdraw it—can affect how much remains available for future years.
How Much Do You Need?
Your withdrawal needs will depend on your spending, other sources of income and the expenses you expect to have during retirement.
When Will You Need It?
The timing of withdrawals can matter because retirement savings may continue to be invested while you are taking money from the portfolio.
Retirement Spending May Change
Spending needs are not necessarily the same throughout retirement. Lifestyle expenses, healthcare costs and other circumstances can change over time.
Your savings are part of a larger income picture.
Retirement income may come from more than one source. Depending on your circumstances, this could include Social Security, pensions, investment accounts, annuities or other sources of income.
Looking at these sources together can provide a broader view of how much may need to come from your personal savings.
Important: A withdrawal strategy should take into account your individual circumstances, including your income needs, investment mix, taxes and other sources of retirement income.
Why the Timing of Investment Returns Can Matter
During retirement, withdrawals and investment performance can occur at the same time. The order in which investment returns occur may therefore be an important consideration.
The same average return does not necessarily produce the same retirement experience.
Investment returns do not necessarily occur in a predictable order. When someone is withdrawing money from an investment portfolio, periods of gains and losses can affect the amount remaining for future withdrawals.
This is commonly referred to as sequence-of-returns risk.
Early retirement years can deserve particular attention.
If withdrawals are being made during a period when investments have declined in value, more assets may need to be sold to provide the same amount of income.
This does not mean market declines can be predicted or avoided. It means the relationship between withdrawals and investment performance is worth understanding when considering a retirement income strategy.
Withdrawals can interact with market conditions.
Imagine two retirees with similar amounts saved and similar long-term investment returns.
If their investment returns occur in different orders while they are taking withdrawals, the amount remaining in their accounts could differ over time.
The takeaway: Retirement planning is not only about the return an investment may earn. The timing of returns, withdrawals and income needs can also be important considerations.
Other Factors That Can Affect Retirement Savings
A retirement account balance is only one part of the picture. Changes in expenses, purchasing power and taxes can influence how much income your savings may need to provide.
Inflation
Over time, rising prices can reduce purchasing power. The amount needed to maintain a particular lifestyle may therefore change during retirement.
Taxes
Depending on the type of account and withdrawal, taxes may affect the amount of money available to meet retirement spending needs.
Healthcare Expenses
Healthcare costs can become an important part of retirement spending. Planning for these expenses can help provide a more complete view of potential income needs.
Unexpected Expenses
Home repairs, family needs, major purchases and other unexpected expenses can change the amount withdrawn from retirement savings.
How Long Retirement Lasts
Retirement savings may need to provide income for many years. The length of your retirement is therefore an important consideration when thinking about withdrawals.
Other Sources of Income
Social Security, pensions, annuities and other income sources may affect how much you need to withdraw from personal savings.
The goal is to look at the whole picture.
Rather than focusing on one variable, retirement planning can involve considering income, expenses, savings, investments, taxes and changing needs together.
Questions to Consider Before Retirement
There is no single retirement-income approach that applies to everyone. Asking the right questions can help you better understand the factors that may affect your retirement savings.
When Do You Expect to Retire?
The age at which you retire can influence how long your savings may need to provide income and how long your assets may remain invested.
How Much Income Might You Need?
Consider your expected lifestyle, essential expenses, discretionary spending and other financial commitments.
What Other Income Will You Have?
Social Security, pensions, annuities and other income sources may affect how much you need to withdraw from your personal savings.
How Might Market Changes Affect Your Plan?
Investment values can fluctuate. Consider how market volatility and withdrawals may interact during different stages of retirement.
What Happens If Your Expenses Change?
Retirement spending can change over time. Healthcare, inflation, travel, housing and unexpected expenses may affect future income needs.
How Will You Adjust Over Time?
Retirement is not necessarily static. Reviewing income needs, expenses and your overall financial picture can be an important part of ongoing planning.
Start by understanding these six areas.
A Practical Way to Think About Retirement Savings
Instead of focusing on one number, consider how several pieces of your retirement picture may work together.
Estimate Your Needs
Consider the expenses and lifestyle you expect during retirement, including costs that may change over time.
Identify Income Sources
Look at Social Security, pensions, annuities, employment income and other sources that may contribute to retirement income.
Consider Your Savings
Understand which accounts and investments you have, how they are positioned and when you may need to access them.
Review the Variables
Consider inflation, investment performance, taxes, healthcare costs, withdrawals and other factors that could change the picture.
The question isn't just “How much have I saved?”
It's also “How might my savings fit into my retirement income plan?”
This information is provided for general educational purposes and is not intended to provide individualized investment, tax or retirement advice. Individual circumstances vary, and retirement planning considerations should be evaluated based on your specific situation.
Retirement Planning Starts With Better Questions
Continue exploring retirement education topics or connect with Rosenberg Wealth Management to learn more about the questions you may want to consider as retirement approaches.
Educational Information
The information presented on this page is provided for general educational and informational purposes only. It is not intended to provide individualized investment, tax, legal or retirement advice, and it does not account for any individual's particular circumstances.
Investment values can fluctuate, and past performance does not guarantee future results. Retirement income and withdrawal considerations vary based on individual circumstances, including savings, expenses, taxes, investment performance, time horizon and other factors.
For additional retirement and investment education, visit Investor.gov and FINRA Investor Education .