Saving Enough for Retirement: How Long Will My Money Last?

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The mental calculus of reaching your retirement savings goals can be exhausting. What is the right retirement age? How long will your nest egg cover your retirement expenses? Will your retirement plan give you enough annual income in retirement?

These are important questions to ask as you are analyzing your pre-retirement income and developing your savings plan. For example, if you are 35 and your goal is to retire at age 65, a good rule of thumb is to start heavily investing in your individual retirement accounts over the next 30 years to ensure you are comfortable and have all your expenses covered later in life.

How To Make Your Money Last in Retirement: 3 Ways

If you are close to retirement and worried about if the funds you have set up will stretch enough to be livable, there are measures you can take to make your money last a bit longer in retirement. Here are three maneuvers to consider when wondering how to make your money last: 

  1. Dynamic withdrawals
  2. The 4% rule
  3. The flooring approach

1. Dynamic Withdrawals

Dynamic withdrawal strategies are where you adjust how you use investment returns by reducing withdrawals in investment years where those investment returns aren’t as high. Ratios of your taxable, tax-deferred and tax-exempt accounts are calculated in the total value of all your savings. You make these dynamic withdrawals each year based on these ratios.

2. The 4% Rule 

The 4% rule is pretty straightforward. Essentially, you can withdraw up to 4% of your portfolio’s value in the first year of retirement. For instance, if you have $100,000 saved for retirement you could spend $4,000 in the first year of retirement when abiding by the 4% rule. Each year following, you can adjust this for inflation.

3. The Flooring Approach

The income floor strategy is a method for determining a client’s spending in retirement and splitting it into needed essential expenses and wanted variable expenses. By using this flooring strategy, essential expenses are used to calculate the income floor that should be covered with your predicted and protected source of income in retirement.

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Retirement Plans To Consider To Reach Your Retirement Goals 

When choosing the best retirement plan for you, make sure you do the research on what will be provided to you when your working days are done. Here are some retirement plans to consider, especially if you are employed full-time:

  • 401(k): This is a common retirement plan offered through employers and is tax-free until you are ready to withdraw the funds after age 59. Many employers match your 401(k) contributions.
  • Traditional IRA: Any individual with a taxable income can start an individual retirement account. The funds won’t be taxed until withdrawal and you can find one that best fits your income.
  • Roth IRA: This account is similar to a Traditional IRA, but instead of paying taxes when you withdraw, you pay taxes when you make contributions.
  • SEP-IRA: A Simplified Employment Pension IRA is specifically designed for people who are self-employed or run their own businesses.
  • Simple IRA: A Savings Incentive Match Plan for Employees IRA is specifically designed for small business owners. To qualify, you have to have 100 employees or fewer.

Great Ways To Start Saving Enough for Retirement

When starting your retirement savings, the end goal is to make your money last throughout retirement so you don’t have to worry about how’ll you be able to afford your cost of living or need to get a part-time job. Here are some ways you can start saving today.

1. Automate Your Savings

A company-provided 401(k), IRA or even an emergency fund account you consistently contribute to will add up to a more comfortable financial situation upon retirement. This is money you set up to be automatically deducted from your paycheck — or you put away every week or month with the intention of not touching — into the account of your choosing.

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2. Set Budget Percentages

Breaking down your budget into percentages is a great way to manage your money.

A good trick to try is the 50/30/20 rule of budgeting, which is when you allocate 50% of your money for needs, including essentials like mortgage, rent and food. Discretionary spending takes up 30% of your income, while 20% of your income every month is set aside for savings. This is just a starting point — you can adjust those percentages to fit your income and needs.

3. Money-Saving Challenges

Whether it’s eliminating excess costs or trying not to spend anything for a month, money-saving challenges can help to launch a nest egg.

For example, the 100 Envelope Challenge challenge sets you up to save $5,000 in 100 days. Simply take 100 empty envelopes and write the numbers 1 to 100 on them. Every day, for 100 days, randomly choose an envelope and whatever number is on the front of the envelope is the amount of money you put into the envelope.

Final Take To GO

It’s not just living expenses you have to factor in for your annual retirement costs, but also issues such as advanced health care or a move to suitable housing.

If you are years away from retirement, there are still a lot of unknown variables that go into calculating what a year in retirement will financially look like for you. If you are close to retirement age, familiarize yourself with the ways in which you can stretch your retirement budget.


  • How long will $100,000 last a person in retirement?
    • Depending on your living costs, $100,000 can last you nearly 30 years if you follow the 4% rule of financial planning during retirement. This rule dictates that you don't pull out more than 4% of your retirement savings within the first year of retirement. However, that may not be realistic as cost of living increases.
  • How long will $1 million last in retirement?
    • Without any unexpected health care costs or increases in cost of living, $1 million is estimated to last you 20 to 30 years, assuming expenditures of around $30,000 to $50,000 each year.
    • However, there are many factors that go into determining how long your savings will last in retirement, such as health care requirements and what state you live in.
  • Is $3 million enough to retire at 50?
    • If you want to retire early at 50, keep in mind such factors as inflation and the rate of return on any investments you have. However, if you have $3 million saved in your retirement fund, you'll most likely be able to retire and comfortably cover your living expenses.
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