To estimate how long your money will last in retirement, you can use various retirement calculators that factor in your savings, expected expenses, investment returns, inflation, and withdrawal rates.
How Retirement Calculators Work
- You input your current age, retirement age, current savings, expected contributions before retirement, and your estimated monthly or annual budget in retirement. The calculator then projects how much you will have saved by retirement and estimates how long those savings will last based on your planned withdrawals
- Many calculators assume a conservative rate of return during retirement (e.g., 5%) and include inflation (e.g., 3%) to adjust your spending power over time
- Some calculators use the "4% rule," which suggests withdrawing 4% of your initial retirement savings annually to make your money last about 30 years. For example, needing $100,000 per year implies a nest egg of $2.5 million
- More advanced calculators simulate market variability using Monte Carlo simulations to provide probabilities of your money lasting under different market conditions
Practical Tips from Calculators
- Reducing fixed expenses like mortgage payments can help your savings last longer
- Planning for a life expectancy into your 90s is common to avoid outliving your money
- Withdrawals should be planned carefully, especially early in retirement, to avoid sequence of returns risk (losing money due to poor market performance early on)
Examples of Popular Retirement Calculators
- NerdWallet Retirement Calculator: Includes salary increases, inflation, and investment returns to estimate savings and how long money lasts
- Calculator.net Retirement Calculator: Estimates savings needed, monthly withdrawals, and duration of savings based on inputs
- Social Security Administration's Retirement Calculator: Focuses on Social Security benefits but can integrate with other savings
- New York Life Savings in Retirement Calculator: Helps determine when savings may be depleted given monthly income targets
- Merrill Edge Retirement Calculator: Uses Monte Carlo simulations to provide average and poor market performance scenarios
Summary
To find out how long your money will last in retirement, use a retirement calculator where you enter your current savings, expected retirement age, income needs, and assumptions about investment returns and inflation. The calculator will estimate the duration your savings can support your lifestyle. Adjusting inputs like spending, withdrawal rates, and investment returns can show different outcomes to help you plan effectively
