July 26, 2021

How Long Will My Money Last Calculator

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You work hard for your money but will it last into retirement? Use this calculator to find out if you're saving enough.

How Long Will My Money Last Calculator

Our calculator provides a quick estimate of how long your money will last. But it's not the whole story.

Many different variables can take a toll on your savings. This includes investment returns, inflation, world events, and surprise expenses.

Keep reading for smart ways to make your money last longer.

How long will a lump sum last?
If your money's not earning any interest, just enter 0% for the annual rate of return. Then you'll see how much your lump sum will stretch.

How long will my money last using the 4% rule?

The 4% rule shows you how to withdraw your retirement savings at a safe, sustainable rate.

Here's how it works:

  • Invest at least 50% of your money in stocks and the rest in bonds
  • Figure out how much you need for basic expenses, like housing and food
  • Make sure you can cover these expenses with guaranteed income, such as Social Security, bond ladders or an annuity
  • During retirement, withdraw 4% out of your savings the first year
  • With each successive year, take out that same dollar amount plus an inflation adjustment

The 4% rule remains a safe withdrawal rate even during the worst market downturns. This strategy was based on research by William Bergen. He tested his theory across different recessions, even the Great Depression, and discovered 4% was a safe withdrawal rate.

The 4% rule can help your money last even longer than 30 years of retirement. Since you don't have to sell stocks during markets, your savings can last for the long haul.

What about inflation?
The Consumer Price Index (CPI) is a common measure of inflation. From 1925 to 2020, the long-term inflation rate averaged 2.9% annually. For 2020, the U.S. The Bureau of Labor Statistics reported the CPI as 1.2%. This rate will affect your distribution's purchasing power.

When will your money run out?

In the next three examples, let's assume the following:

  • You'll withdraw $3,000 every month
  • Your federal marginal tax bracket is 25%
  • The annual rate of return on your savings is 8%
  • You may increase your withdrawal amount by 4% per year

  1. How long will $500,000 last in retirement?
    Your money is projected to last approximately 16 years with monthly withdrawals totaling $828,251.

  2. How long will $800,000 last in retirement?
    Your money is projected to last approximately 30 years with monthly withdrawals totaling $2,024,574.

  3. How long will $1,500,000 last in retirement?
    Your money is projected to stretch beyond 30 years and you'll be able to make monthly withdrawals beyond $4,000,000.

How to Stretch Your Nest Egg
  1. Protecting your assets with a life insurance policy
  2. Consider delaying retirement to maximize your Social Security
  3. Make modest cuts in spending
  4. Downsize your living situation, if possible
  5. Consolidate your investments to cut down on fees (review our recommended brokerages)

Retirement readiness checklist

The average retirement age is 65. But everyone's timeline is different.

Do you want to leave your corporate job for something more flexible? Focus on hobbies? Or travel the world and work in spurts?

Here are a few smart money moves that'll help you reach your goals - no matter what they look like.

  1. Determine your retirement spending needs
    You can use a free tool from Personal Capital to find out. Their Retirement Planner aggregates your spending history and portfolio to forecast how likely you'd be able to afford that lifestyle in the future.

  2. Get tax benefits with a Roth IRA
    With a Roth IRA, your withdrawals are tax-free after you turn 59 ½. Savers over age 50 can contribute $7,000 per year instead of the $6,000 limit.

    Keep in mind if your account is less than 5 years old, withdrawals may be subject to taxes and penalties.

  3. Assess risk tolerance vs. investment goals
    Make sure your investments line up with your time horizon and risk tolerance. To manage your money, consider opening a self-managed brokerage account. Ally Invest has no account minimums and offer commission-free trades for stocks and ETFs. Plus, they're known for high customer satisfaction ratings.

    If you want more conservative investments, consider putting away your money in bonds, CDs and high-yield savings accounts.

  4. Protect your assets
    As you approach retirement, make sure your money will go towards the right place. Creating a will gives you control over who gets your property if you're no longer here. This includes any bank accounts, real estate, and other assets you own.

    You'll also name a legal guardian if you have any children. Otherwise, the government decides how your finances are distributed.

    You can create a legally-binding will in about 5 minutes for free with Fabric.

Bottom line

The average retirement savings is $172,000. As life expectancy continues to increase, this amount won't go as far as it used to.

As you approach your golden years, it's important to gauge how far your existing savings will take you. Bookmark this page to check in on your retirement accounts every couple of years. It'll give you peace of mind and a game plan for your retirement years.

Amber Kong is a content and creative at CreditDonkey, a personal finance comparison and reviews website. Write to Amber Kong at amber.kong@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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Ally Invest Coupon Codes

Get Up to $3,000

Expires in 5 days

The minimum qualifying deposit to receive a cash bonus is $10,000. Accounts will be reviewed 60 days after account opening to determine the total qualifying deposit. Corresponding cash bonus will be credited to the account within 10 business days. Once the bonus is credited to the account, the bonus and qualifying deposit (minus any trading losses) is not available for withdrawal for 300 days. If the qualifying deposit is withdrawn, the bonus may be revoked.

Deposit or TransferCash Bonus
$10,000 - $24,999$100
$25,000 - $99,999$250
$100,000 - $249,999$300
$250,000 - $499,999$600
$500,000 - $999,999$1,200
$1,000,000 - $1,999,999$2,000
$2,000,000+$3,000

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