How Long Will My Money Last?

Why a simulation beats a rule of thumb

The 4% rule answers this question with a single historical average: over every 30-year window in modern US market history, withdrawing 4% of the starting balance, inflation-adjusted, never ran dry. It is a useful floor and a poor plan, because your retirement is not the average window, your spending is not inflation-shaped (it falls in your eighties and spikes around health events), and your guaranteed income changes the shape entirely. A household spending $70,000 with $30,000 arriving from Social Security only asks its portfolio for $40,000 in year one, a 5.3% withdrawal rate on $750,000, which is why the simulation below outlives the rule of thumb.

The worked example, year by year

Start with $750,000, spend $70,000 a year rising with 2.5% inflation, receive $30,000 a year of inflation-adjusted guaranteed income, and earn 5% a year. The portfolio covers only the gap, and the gap grows more slowly than the balance at first:

Under these exact assumptions the money lasts into year 27. Read the table the way a planner would: the balance still grows in the early years because earnings outrun the gap, and the crossover, where the withdrawal passes the earnings, is the moment the plan starts spending principal in earnest. Everything about your real plan is an argument with one of these five inputs.

The risk the average hides: sequence

This simulation earns a smooth 5% every year; markets pay in lumps. A deep drop in the first five years, while withdrawals are also leaving, does damage that the same average return earned later cannot fully repair, because there is less capital left to recover with. That asymmetry, sequence-of-returns risk, is why the standard defenses exist: hold two or three years of the gap in cash-like assets so a bad market never forces a sale, keep the withdrawal flexible enough to trim in down years, and treat the first five years' spending as the plan's fragile period. A smooth-line tool cannot show you that risk; it can only show you the plan the risk threatens.

Two levers dominate all others. Delaying retirement or Social Security shrinks the gap from both ends (more contributions, larger guaranteed income); our claiming age calculator prices the second one. And spending flexibility in the first decade is worth more than any asset-allocation refinement: cutting the gap by $5,000 a year in the example above adds several years of runway, because early dollars are the ones that would have compounded longest.

Guardrails: how real plans adjust mid-flight

No household actually spends on rails for 30 years, and the plans that survive are the ones with pre-agreed adjustments. The common guardrail design sets a floor and a ceiling on the withdrawal rate: if a strong market pushes the portfolio's value up so the planned withdrawal falls below, say, 4% of the current balance, spending may rise; if a weak market pushes it above 6%, spending trims by a stated amount, often 10% of the gap spending, until the rate re-enters the band. The trim sounds small and is not: cutting the withdrawal during the fragile first decade removes dollars that would otherwise leave at depressed prices, which is precisely when each withdrawn dollar costs the most future income. Decide the guardrails now, while they are hypothetical, because in a drawdown they feel like losses instead of rules.

Taxes in the drawdown years

The simulation is pre-tax, and the order you tap accounts changes the tax bill by enough to matter. The conventional sequence spends taxable brokerage money first (capital gains rates, and a basis step-up on anything left to heirs), traditional IRA money second, and Roth money last, letting the tax-free account compound longest. Reality adds two refinements. In the low-income gap years before Social Security and RMDs, deliberately drawing traditional money, or converting it, fills cheap brackets that would otherwise go unused. And once RMDs begin, they set a floor under traditional withdrawals regardless of spending needs, which can push the sequence whether you like it or not; the RMD calculator shows the size of that floor by age. A drawdown plan that ignores which account the dollar leaves is leaving one of its largest levers unpulled.

The house on the balance sheet

Most households' largest single asset never appears in this calculator. Home equity is not income, but it is a backstop with three distinct taps: downsizing, which converts equity to portfolio at a chosen moment; a standby reverse mortgage line of credit, whose available amount grows over time and which planners increasingly use as a sequence-risk buffer (spend from the line in down years, repay in up years, and never sell depressed assets); and the simple fact that a paid-off home lowers the spending line itself. Whether to count it is a values question. That it changes the answer to "how long will my money last" is an arithmetic one, and a household whose plan depletes at year 28 on paper while sitting on 25 years of housing is not in the position the headline number suggests.