How long will investments last

The simplest way to do this is to weigh your total savings, plus investment returns over time, against your annual expenses.

Try our calculator to get your estimate:. A calculator like the one above can be a helpful guide. Below are some smart rules of thumb on how to withdraw your retirement savings in a way that gives you the best chance of having your money last as long as you need it to, no matter what the world sends your way. Bengen tested his theory across some of the worst financial markets in U.

There are many dynamic withdrawal strategies, with varying degrees of complexity. You might want help from a financial advisor to set one up.

A word about annuities: While some are overpriced and risky, using the right annuity can be an effective retirement-income tool — you fork over a lump sum in return for guaranteed payments for life. In the right circumstances, even a reverse mortgage might work to shore up your income floor. That way, you always know your basics are covered.

Then, let your invested savings be responsible for your discretionary expenses. If you could use help with your financial plan, see our best financial advisors list. Ways to make your savings last longer. Dynamic withdrawals.

Learn More. Fees 0. Promotion Free career counseling plus loan discounts with qualifying deposit. For example, investing more in bonds could result in slower investment growth because bonds typically don't see the returns that stocks do. Most retirees are more active in the early part of retirement. They often devote more time to hobbies or travel, and their spending is often higher.

Spending then falls in the middle part of retirement, before rising again due to costly healthcare expenditures late in life. It limits you to a set amount, which may be too little in your early years and too much in your later years. You divide your account balance by the distribution period next to your age in this table to figure out how much you must withdraw every year. The Center for Retirement Research used this as its jumping-off point and calculated annual withdrawal amounts as a percentage of total account balance beginning at 65, when it claims you can safely withdraw 3.

Changing market conditions may affect what you can safely withdraw, and you're limited to smaller amounts when you're younger and may want to spend more. But you could make up for this somewhat by spending any earned interest and dividends in addition to the percentages recommended. An even better approach is to ignore cookie-cutter strategies altogether. Talk to a financial advisor about your plans for retirement and how they will affect your spending habits.

An advisor will help you determine how much you need to save and how much you can comfortably spend each year to avoid running out of money too soon. Make sure you choose a fee-only financial advisor. Those who earn commissions when you buy certain investments can make recommendations based on their best interests rather than yours. Always ask for a copy of an advisor's fee schedule so you understand what you're signing up for.

It is based on outdated assumptions about the interest you'll likely earn from investing in bonds. You should develop a personalized withdrawal strategy that's right for you. Your needs and goals in your later years are dynamic, and you need a withdrawal plan that is dynamic, too.

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