You’re staring at your bank balance and doing that mental math we all do late at night. Maybe you’re thinking about quitting a job you hate, or maybe you’re actually looking at retirement. The question is always the same: how long will money last if I stop trading my time for a paycheck right now? Honestly, most of the "retirement calculators" you find online are garbage. They use flat averages that don't exist in the real world. They assume inflation is a steady $2%$ or $3%$ every year, ignoring the reality that a bag of groceries cost $40%$ more than it did a few years ago.
It's scary.
If you have $$500,000$, you might think you're set. But if you live in a high-cost area like San Francisco or New York, that money could vanish in less than seven years. Meanwhile, in a rural town in Greece or even parts of the American Midwest, that same pile of cash could comfortably carry you for two decades. The math isn't just about the number in your account; it's about the "burn rate" of your specific life.
Why the 4% Rule is Basically Dead
For decades, the "4% Rule" was the gold standard. Created by Bill Bengen in 1994, it suggested that if you withdrew $4%$ of your portfolio in the first year and adjusted for inflation thereafter, your money would likely last 30 years.
Things have changed.
We are living longer. Much longer. If you retire at 60, there is a very real chance you’ll need that money to last until you’re 95. Bengen himself has actually revised his own rule recently, suggesting $4.7%$ might be okay, but many modern economists, like those at Morningstar, have argued that a safer starting point is closer to $3.3%$ or $3.5%$ given current market valuations and lower expected bond returns.
When you ask how long will money last, you have to account for "Sequence of Returns Risk." This is a fancy way of saying: if the stock market crashes in the first three years of your retirement, you’re in deep trouble. Even if the market recovers later, the math of selling stocks while they are down to pay for your rent is devastating. It "cannibalizes" your principal. You can't recover from that easily.
The "Cash Buffer" Strategy
To fight this, savvy investors don't just keep everything in the S&P 500. They keep two to three years of living expenses in high-yield savings accounts or short-term CDs. This way, if the market tanks, you don't touch your stocks. You live off the cash. You give your portfolio time to breathe. It’s a psychological game as much as a numerical one.
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The Invisible Thief: Lifestyle Creep and Inflation
Inflation isn't just a headline on the news. It is the literal erosion of your purchasing power. If you have $$1$ million today, and inflation averages $3%$, in twenty years, that million only buys what $$550,000$ buys today.
Think about that.
You’ve effectively lost half your wealth without spending a dime.
Then there is lifestyle creep. You get used to the nice coffee. The subscription services you forgot to cancel. The annual trip to see family. Most people calculate their "needs" but forget their "wants" tend to grow over time. To accurately predict how long will money last, you need to track your actual spending for at least six months. Not what you think you spend. What you actually spend. Every latte. Every oil change. Every "oops" purchase on Amazon.
Health Care: The Great Eraser
If you are in the United States, healthcare is the biggest wild card in the deck. According to the Fidelity Retiree Health Care Cost Estimate, an average 65-year-old couple retiring in 2024 may need approximately $$315,000$ saved (after-tax) to cover health care expenses in retirement.
That doesn't include long-term care.
If you end up needing a nursing home, costs can easily exceed $$100,000$ per year per person. This is why Long-Term Care Insurance (LTCI) or hybrid life insurance policies are becoming so common. Without a plan for health, the answer to how long will money last is often: "Until the first major medical emergency."
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Real World Example: The Tale of Two Retirements
Let's look at two people, both with $$800,000$.
Person A stays in their four-bedroom suburban home with high property taxes and maintains two car payments. They spend $$6,000$ a month. Their money, assuming a conservative $5%$ return, lasts about 15 to 17 years.
Person B downsizes. They sell the big house, buy a smaller condo for cash, and move to a state with no income tax. They cut their spending to $$3,500$ a month. Their money likely lasts 35+ years.
Same starting amount. Completely different destinies.
Taxes are the Silent Partner
You don't own all the money in your 401(k). The government owns a chunk of it. If you have $$1,000,000$ in a traditional IRA, and you're in the $22%$ tax bracket, you really only have $$780,000$.
Many people forget this.
They see the big number and feel rich. Then they start taking withdrawals and realize the IRS wants its cut. This is why Roth conversions or contributing to a Roth IRA/401(k) is so powerful. Tax-free growth is the holy grail of making sure you don't run out of cash. Diversifying your "tax buckets"—having some money in taxable accounts, some in tax-deferred (Traditional), and some in tax-free (Roth)—gives you the flexibility to pull from different sources depending on what tax laws look like in ten years.
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The Psychological Burden of "De-cumulation"
It is incredibly hard to go from a lifetime of saving to a lifestyle of spending. Most people who have successfully saved enough to worry about how long will money last are biologically wired to save.
Spending the principal feels like a sin.
This leads to "Die With Zero" syndrome, a concept popularized by Bill Perkins. He argues that many people over-save and under-live, dying with millions in the bank that they could have used to create memories when they were younger and healthier. There’s a balance. You don't want to run out of money at 90, but you also don't want to be the richest person in the graveyard at 80 having never seen the world.
Actionable Steps to Protect Your Longevity
Stop guessing. Start measuring.
First, calculate your Core Floor. This is the absolute minimum amount of money you need to keep the lights on, the belly full, and the body insured. Once you know that number, you can see how much of it is covered by "guaranteed" income like Social Security or a pension. The gap between your Core Floor and your guaranteed income is what your savings must cover.
- Audit your subscriptions: If you haven't used it in thirty days, kill it.
- Check your asset allocation: Are you too heavy in tech stocks? Or too heavy in cash that's losing to inflation?
- Model a "Black Swan" event: What happens to your plan if the market drops $30%$ tomorrow? If the answer is "I'd be homeless," you need more bonds or cash.
- Consider a "Side Hustle" for fun: Even earning $$500$ a month in retirement can significantly extend the life of your portfolio by reducing the amount you need to withdraw.
The reality of how long will money last is that it’s a moving target. You have to check in on it every year. Rebalance. Adjust. Pivot. If inflation spikes, you spend a little less on travel that year. If the market booms, you take that extra trip. Flexibility is the only true "safe withdrawal rate."
Determining Your Final Number
- Track every penny for 90 days to find your true annual spend.
- Subtract your expected Social Security benefit from that spend.
- Multiply the remaining number by 25 (for a 4% withdrawal) or 30 (for a 3.3% withdrawal).
- If your current savings are below that number, you either need to save more, work longer, or lower your cost of living.
Don't wait until you're 65 to do this math. Do it now. Whether you're 30 or 55, knowing your burn rate is the only way to sleep through the night without worrying about a zero balance.