How Long Will My Retirement Money Last?

How Long Will My Retirement Money Last?

It depends on two numbers: how much you saved and how much you spend each year. A widely used planning rule says that if you take out about 4% of your savings in the first year and bump that amount up for inflation, your money will likely last around 30 years. That is not a promise, but it is the safest starting point most people use.

If you retire at 65 and expect to live to 95, that 30-year window is the one your savings need to cover. The good news: you do not have to get it perfect on day one. Small tweaks to your yearly spending can stretch your money a long way.

The 4% Rule in Plain Words

The 4% rule works like this. In your first year of retirement, you pull out 4% of your total savings. Then, each new year, you add the inflation rate to that dollar amount so your buying power stays steady.

For example, say you retire with $600,000 saved in a 401(k), which is a tax-sheltered retirement account many US employers offer.

• First year withdrawal: $600,000 × 0.04 = $24,000
• Year two: if inflation was 3%, you add 3% of $24,000 ($720), so you withdraw $24,720
• Year three: if inflation was 2%, you add 2% of $24,720 ($494), so you withdraw $25,214

Each year the dollar amount grows, but your spending power stays roughly the same. The 4% rate comes from looking at how US stock and bond markets behaved over past decades. It is not a law, and nothing about markets is guaranteed. But it gives you a sane, conservative starting number. You can read the full breakdown in our 4% rule guide.

What Changes the Answer

The 4% rule assumes you retire at 65 with a mix of stocks and bonds that earns a modest return on average. Several things can push your "years of money" shorter or longer.

Spending less than 4%. If your first-year withdrawal is 3% instead of 4%, your savings stretch further. At 3%, $600,000 lasts well past 30 years in most market conditions.

Spending more than 4%. Pull out 6% in year one, and the same $600,000 may only cover about 22 to 25 years. That leaves a gap if you live to 90.

Inflation running hot. A 30-year retirement with 3% average inflation means your last-year spending power is much lower than your first. The rule handles this by adjusting each year, but high inflation can drain a portfolio faster than expected. You can see the math in our retirement and inflation post.

Market drops in your first few years. If a big recession hits right when you retire and you also withdraw money, you lock in losses. This is called sequence-of-returns risk, and it is the main reason the 4% rule is a starting point, not a fixed schedule.

Other income. If you collect Social Security in the US, or CPP and OAS, the Canada Pension Plan and Old Age Security, Canada's two public retirement pensions, those checks reduce how much you pull from savings every year. That helps your pot last much longer.

A Simple Table: How Long $500,000 Lasts

Here is a quick look. These numbers assume your savings earn about 5% per year on average and you raise your withdrawal for 2.5% inflation each year. Real markets go up and down, so treat this as a rough guide, not a script.

First-year withdrawal	Year 1 you take	Roughly how many years the money lasts
3% of $500,000	$15,000	Well past 30 years
4% of $500,000	$20,000	About 30 years
5% of $500,000	$25,000	About 26 years
6% of $500,000	$30,000	About 22 years
7% of $500,000	$35,000	About 18 years

Notice the shape of the table. Moving from 4% to 5% does not just cost you one year. It cuts roughly four years off your runway. The jump from 4% to 6% costs you eight years. Spending rate is the single biggest lever you control.

Working Backward: What Savings Do You Need?

Flip the question around. If you know what you want to spend each year, you can figure out how much to save.

The 4% rule means you need roughly 25 times your yearly spending saved up. (One divided by 0.04 equals 25.) For example:

• You want to spend $40,000 a year from savings.
• $40,000 × 25 = $1,000,000 in your retirement accounts.

If you want to spend $30,000:

• $30,000 × 25 = $750,000.

This is the same math in the 25x rule explained another way. Use whichever version clicks for you.

Remember, you do not need to hit that number alone. Social Security, CPP, OAS, a pension, or part-time work all reduce the yearly gap your savings must fill. If your Social Security check covers $2,000 a month, that is $24,000 a year you do not pull from your pot.

If You Are Worried You Will Run Out

That fear is common, and it does not mean you are behind. Here are honest, doable ways to buy yourself more years:

• Trim your withdrawal rate by a percentage point. Going from 5% to 4% can add 4 or more years. You do not have to quit retiring. Just shift your spending slightly for the first few years and check in yearly.
• Delay Social Security or CPP a little. For CPP, each month you wait past 65 adds a fixed 0.7% to your monthly check, up to age 70. For Social Security, your check also grows the longer you delay, but the increase speeds up after your Full Retirement Age, which is 67 for people born in 1960 or later. Those extra dollars compound over the years you collect. See our guide on when to take Social Security for the step-by-step.
• Work part-time for a few years. Even $500 a month in part-time earnings means $6,000 you do not withdraw from savings. Over ten years, that keeps a chunk of your portfolio growing.
• Keep an eye on Medicare or provincial health costs. A surprise medical bill can force a big withdrawal. Knowing what Medicare covers, or what your province covers in Canada, helps you plan.
• Review your plan every year. Markets change, spending changes, health changes. The 4% rule is a starting number, not a set-in-stone budget.

Figuring Out Your Own Number

You can plug these rules into a spreadsheet, but it gets messy fast. You have to factor in taxes on withdrawals, inflation, the years before Social Security starts, your spouse's savings, and a 30-year timeline.

That is the exact job When Can I Retire does. You type in your savings, expected spending, Social Security or CPP/OAS start ages, and it walks through the math year by year, including taxes, inflation, and any gap years before benefits start, so you can see which age your money actually runs out. It is free to run a check, and you can upload a statement or just type in round numbers. No sales pitch, no lock-in.