Retirement Calculator How Long Will My Money Last

Estimate the longevity of your retirement savings based on your current nest egg, withdrawal rate, and expected investment growth.

Retirement Savings Longevity Calculator

Your Retirement Savings Projection

Years Until Depletion: — | Years of Retirement Covered: — | Remaining Balance at Depletion: —

This projection estimates how long your savings will last based on your inputs.

Retirement Savings Longevity Projections

Annual Balance Projection

Year	Starting Balance	Withdrawal	Investment Growth	Ending Balance

Retirement Savings Growth Over Time

Chart showing projected ending balance year over year.

What is a Retirement Calculator (How Long Will My Money Last)?

A retirement calculator how long will my money last is a powerful financial tool designed to help individuals estimate the duration their retirement savings will sustain them. It takes into account crucial variables such as your current retirement nest egg, the amount you plan to withdraw annually, your expected investment returns, and the impact of inflation. Essentially, it answers the critical question: "Will my money outlive me?" or "How long can I afford to live off my savings?"

This type of calculator is invaluable for anyone planning for or already in retirement. It provides a data-driven perspective on financial security, helping to alleviate anxieties about outliving one's resources. By inputting your specific financial details, you gain a clearer picture of your retirement runway.

Who Should Use It?

Anyone with retirement savings should consider using a retirement calculator how long will my money last. This includes:

• Individuals nearing retirement age who want to confirm their readiness.
• Those already retired who need to manage their withdrawals effectively.
• Younger individuals who want to understand the long-term implications of their savings and investment strategies.
• Anyone seeking to model different retirement scenarios (e.g., earlier retirement, higher expenses).

Common Misconceptions

• "My savings will last forever." This is rarely true without careful planning. Investment returns fluctuate, and inflation erodes purchasing power.
• "A fixed withdrawal amount is sustainable." Inflation means your expenses will likely increase over time, requiring higher withdrawals to maintain your lifestyle.
• "Past performance guarantees future results." While historical data informs projections, market conditions change, and future returns may differ significantly.
• "The calculator is a crystal ball." It provides an estimate based on assumptions. Actual results will vary.

Retirement Calculator: How Long Will My Money Last? Formula and Mathematical Explanation

The core of the retirement calculator how long will my money last relies on a year-by-year projection, simulating the growth and depletion of your retirement funds. The calculation is iterative, meaning the result of one year becomes the input for the next.

Here's a breakdown of the process:

1. Starting Point: The calculation begins with your current retirement savings.
2. Annual Withdrawal: In the first year, the initial desired annual withdrawal is subtracted from the starting balance.
3. Investment Growth: The remaining balance then grows based on the expected annual investment return.
4. Inflation Adjustment (if applicable): If the calculator is set to account for inflation, the withdrawal amount for the *next* year is increased by the inflation rate.
5. Iteration: Steps 2-4 are repeated for each subsequent year until the balance reaches zero or a predetermined limit.

The Formula (Conceptual):

Let:

• $B_0$ = Initial Retirement Savings
• $W_0$ = Initial Annual Withdrawal
• $r$ = Expected Annual Investment Return (as a decimal)
• $i$ = Expected Annual Inflation Rate (as a decimal)
• $W_n$ = Annual Withdrawal in Year $n$
• $B_n$ = Balance at the end of Year $n$
• $B_{n-1}$ = Balance at the beginning of Year $n$

For Year $n$ (where $n \ge 1$):

Withdrawal in Year $n$ ($W_n$):

If withdrawal increases with inflation: $W_n = W_{n-1} \times (1 + i)$

If withdrawal is fixed: $W_n = W_0$

Balance at End of Year $n$ ($B_n$):

$B_n = (B_{n-1} – W_n) \times (1 + r)$

The calculator determines the number of years ($N$) it takes for $B_N$ to become less than or equal to zero.

Variables Table:

Variable	Meaning	Unit	Typical Range
Current Retirement Savings	Total accumulated funds available for retirement.	Currency (e.g., USD)	$100,000 – $5,000,000+
Desired Annual Withdrawal	The amount of money needed annually to cover living expenses.	Currency (e.g., USD)	$20,000 – $100,000+
Expected Annual Investment Return	The average annual percentage gain expected from investments.	Percentage (%)	3% – 10% (conservative to aggressive)
Expected Annual Inflation Rate	The average annual rate at which prices for goods and services increase.	Percentage (%)	1% – 5%
Annual Withdrawal Increase	Whether withdrawals are adjusted annually for inflation.	Yes/No	Yes/No

Practical Examples (Real-World Use Cases)

Example 1: The Cautious Retiree

Sarah is 65 and retiring next month. She has $750,000 in her retirement accounts. She wants to withdraw $35,000 per year, adjusted for inflation. She anticipates a conservative average annual return of 5% on her investments, with an average inflation rate of 2.5%.

Inputs:

Current Savings: $750,000

Desired Annual Withdrawal: $35,000

Expected Annual Return: 5%

Inflation Rate: 2.5%

Withdrawal Increase: Yes

Outputs:

Years Until Depletion: Approximately 31 years

Years of Retirement Covered: 31 years

Remaining Balance at Depletion: ~$0

Interpretation: Sarah's savings appear sufficient to support her desired lifestyle for over 30 years, assuming her return and inflation estimates hold true. This provides her with significant peace of mind.

Example 2: The Aggressive Investor

Mark is 60 and planning to retire in 5 years. He currently has $1,200,000 saved. He estimates needing $60,000 annually in today's dollars, but he's unsure if he wants it to increase with inflation. He's comfortable with a more aggressive investment strategy, expecting an 8% annual return, and anticipates inflation at 3%.

Inputs:

Current Savings: $1,200,000

Desired Annual Withdrawal: $60,000

Expected Annual Return: 8%

Inflation Rate: 3%

Withdrawal Increase: No (for this scenario)

Outputs:

Years Until Depletion: Approximately 27 years

Years of Retirement Covered: 27 years

Remaining Balance at Depletion: ~$0

Interpretation: Even with a higher withdrawal and fixed amount, Mark's substantial savings and higher expected return allow his money to last nearly three decades. If he chose to increase withdrawals with inflation, the duration would likely decrease, highlighting the importance of this assumption.

How to Use This Retirement Calculator: How Long Will My Money Last?

Using this retirement calculator how long will my money last is straightforward. Follow these steps to get your personalized projection:

1. Enter Current Retirement Savings: Input the total amount you have saved for retirement across all your accounts (e.g., 401(k)s, IRAs, brokerage accounts).
2. Specify Desired Annual Withdrawal: Enter the amount you anticipate needing each year to cover your living expenses in retirement. Consider your current spending and adjust for potential changes.
3. Input Expected Annual Investment Return: Provide a realistic estimate of the average annual percentage return you expect from your investments. This is often based on historical averages for your chosen asset allocation (e.g., stocks, bonds).
4. Enter Expected Annual Inflation Rate: Estimate the average annual rate at which prices are expected to rise. This impacts the purchasing power of your savings over time.
5. Select Withdrawal Increase Option: Choose whether your annual withdrawal amount should automatically increase each year to keep pace with inflation. Selecting "Yes" provides a more realistic projection of future spending needs.
6. Click "Calculate Duration": Once all fields are populated, click the button. The calculator will process your inputs and display the results.

How to Read Results:

• Main Result (Years Until Depletion): This is the primary output, indicating how many years your savings are projected to last under the given conditions.
• Years of Retirement Covered: This is often the same as "Years Until Depletion," representing the duration your funds will support your retirement lifestyle.
• Remaining Balance at Depletion: This shows the approximate balance left in your accounts when they are projected to run out. Ideally, this should be zero or very close to it.
• Projection Table: This table provides a year-by-year breakdown, showing how your balance changes, including withdrawals, growth, and the impact of inflation.
• Projection Chart: Visualizes the trend of your ending balance over the years, making it easier to grasp the long-term trajectory.

Decision-Making Guidance:

Use the results to inform your retirement strategy. If the projected duration is shorter than your expected lifespan or desired retirement length, consider:

• Increasing your savings rate.
• Working a few more years to let your investments grow and reduce the number of withdrawal years.
• Adjusting your investment strategy for potentially higher returns (understanding the associated risks).
• Reducing your planned annual withdrawal amount.
• Revisiting your inflation expectations or withdrawal increase assumptions.

This tool is a guide; consult with a financial advisor for personalized recommendations.

Key Factors That Affect Retirement Savings Longevity

Several critical factors significantly influence how long your retirement money will last. Understanding these can help you make more informed decisions:

1. Starting Nest Egg Size:

   This is the most fundamental factor. A larger initial balance provides a bigger cushion and more time for compounding growth to work its magic. Even small increases in your starting savings can have a substantial impact on longevity.

2. Withdrawal Rate:

   The percentage of your portfolio you withdraw each year is crucial. A common rule of thumb is the 4% withdrawal rate, but this is debated and depends heavily on market conditions and time horizon. Lower withdrawal rates significantly increase the longevity of your savings.

3. Investment Returns:

   The rate at which your investments grow directly impacts how long your money lasts. Higher, consistent returns (while managing risk) can extend your retirement runway considerably. Conversely, poor or negative returns can deplete savings much faster.

4. Inflation:

   Inflation erodes the purchasing power of your money over time. If your withdrawals don't keep pace with inflation, your standard of living may decline. If they do increase with inflation, your principal will be drawn down faster, potentially shortening the duration your savings last.

5. Fees and Expenses:

   Investment management fees, advisory fees, and fund expense ratios reduce your net returns. Even seemingly small annual fees (e.g., 1%) can significantly shorten the lifespan of your retirement savings over decades.

6. Taxes:

   Withdrawals from retirement accounts are often taxed. Depending on the type of account (taxable, tax-deferred, tax-free) and your tax bracket in retirement, taxes can substantially reduce the net amount available for spending, effectively increasing your required withdrawal.

7. Longevity Risk (Living Longer Than Expected):

   People are living longer. Planning for a retirement that could last 30+ years is essential. Underestimating your lifespan can lead to outliving your savings, making longevity risk a critical factor in planning.

8. Unexpected Expenses:

   Healthcare costs, home repairs, or supporting family members can lead to unplanned large expenses. Having an emergency fund or buffer in your retirement plan can prevent derailing your long-term projections.

Frequently Asked Questions (FAQ)

Q1: What is a sustainable withdrawal rate from retirement savings?

A: A commonly cited guideline is the 4% rule, suggesting you can withdraw 4% of your initial portfolio value in the first year of retirement and adjust subsequent withdrawals for inflation. However, this rule is debated and may need adjustment based on market conditions, your age, and retirement duration. Lower rates (e.g., 3-3.5%) are generally considered safer.

Q2: How does inflation affect my retirement savings?

A: Inflation reduces the purchasing power of your money. If your savings don't grow faster than inflation, you'll be able to buy less over time. If you increase your withdrawals to match inflation, your principal depletes faster, potentially shortening how long your money lasts.

Q3: Should I adjust my withdrawals for inflation every year?

A: It's generally recommended to plan for withdrawals that increase with inflation to maintain your standard of living. However, in years with very low investment returns or market downturns, you might consider temporarily pausing or reducing the inflation adjustment to preserve your capital.

Q4: What if my investments perform poorly?

A: Poor investment performance, especially early in retirement (sequence of returns risk), can significantly shorten the lifespan of your savings. This calculator uses an average return, but actual returns will vary. Having a diversified portfolio and a flexible withdrawal strategy can help mitigate this risk.

Q5: How accurate is this retirement calculator?

A: This calculator provides an estimate based on the inputs and assumptions you provide. It uses a simplified model and cannot predict future market performance, inflation rates, or your exact lifespan. It's a planning tool, not a guarantee.

Q6: What's the difference between this calculator and a retirement savings goal calculator?

A: A retirement savings goal calculator helps you determine how much you *need* to save to reach a certain nest egg. This retirement calculator how long will my money last focuses on how long your *existing* savings will sustain you once you start withdrawing from them.

Q7: Should I include Social Security or pensions in this calculation?

A: This calculator is designed primarily for your personal investment savings. You can adjust the 'Desired Annual Withdrawal' to reflect the amount you need *from your savings* after accounting for guaranteed income sources like Social Security or pensions.

Q8: What happens if I run out of money according to the calculator?

A: If the calculator shows your money running out before your expected lifespan, it's a signal to adjust your plan. Consider saving more, working longer, reducing expenses, or adopting a more conservative withdrawal strategy.