How long will my savings last? I'm retired now!

Last updated on March 18th, 2025 at 03:26 pm

Retirement brings both freedom and financial responsibility. A common concern among retirees is determining how long their current retirement savings will last. The best we can do for you in this article is to provide useful tools and information so you can answer your own question. How long will my savings last?

This article provides a structured approach to evaluating your financial situation by assessing expenses, income, and potential shortfalls. At the end of this article, you will find a budget tool designed to help you manage your retirement plan effectively. Along with the budget tool, use our tool to help you save money on taxes when withdrawing funds from your IRA.

Table of Contents

Step 1: Start with Your Living Expenses

The first step in determining how long your savings will last is to identify all your living expenses. Since you are already retired, you likely have a good understanding of your typical monthly costs. List all fixed and variable expenses, including:

Housing: Mortgage terms, rent, property taxes, insurance, maintenance
Utilities: Electricity, water, gas, internet, phone
Healthcare: Insurance premiums, medical expenses, long-term care insurance
Transportation: Auto purchase loan, fuel, maintenance, public transit
Groceries & Essentials: Food, personal care items
Entertainment & Travel: Dining out, hobbies, vacations
Miscellaneous: Credit card payments, loan payments, final expenses, unforeseen costs

It’s important to plan for rising costs, particularly for medical expenses, property taxes, and home insurance. Using the budget tool found at the end of this article, enter all your expenses to get a clear picture of your monthly spending.

Another thing to keep in mind is that everything wears out. Your appliances, the roof of your house, your vehicles. They all need maintenance and/or replacement. The factor that every month you should consider a portion of your income to pay for the larger expenses when they arise in a year, five years, etc.

reviewing the budget about how long savings will last — Reviewing the Budget

Step 2: Add Your Income Sources

Now, list all sources of income you receive each month:

Social Security Benefits
Pension Payments & Company Pension Payout Options
Annuities & Tax Advantages of an Annuity
IRA or 401(k) Distributions
Dividends and Investment Interest
Rental Income from Real Estate Investment
Tax-Free Investment Return

Consider how your income will change over the years. Social Security benefits do not keep up with inflation but they will go up every year. Your pension may or may not increase yearly. Dividend earnings will vary. If you have tenants in rented property tell them there will be an annual increase. It’s critical that you keep rents in the range of current market levels so you can afford maintenance costs.

Enter these amounts into the budget tool and compare them to your total expenses. If your income covers your expenses with a monthly surplus, your savings may last longer. If there’s a shortfall, you need to consider reducing expenses, increasing investment earnings, or supplementing your income.

Step 3: Ensure Your Savings & Investments Are Maximized

Even in retirement, it’s crucial to ensure your savings and investments are earning the maximum amount possible within your comfort zone and risk tolerance. Consider:

Assessing Your Rate of Return: Review your investments periodically to ensure they align with your retirement goal.
Seeking Investment Advice: If you have a large portfolio, consult financial advisors or a registered broker-dealer.
Diversifying Assets: Avoid putting too much money into a single investment; balance stocks, bonds, real estate, and cash.
Lower Interest Rate Strategies: Refinance mortgages or consolidate debt to secure a lower rate and reduce monthly payment obligations.
Reviewing Historical Inflation Comparisons: Adjust investments based on economic trends and projected future value of an annuity.
Using a Tax-Efficient Strategy: Work on a plan to move your rollover IRA into a Roth IRA over time to reduce tax implications while avoiding additional tax burdens.

Step 4: Addressing a Shortfall & Supplementing Income

If your expenses exceed your income, there are several strategies to bridge the gap:

Reduce Spending: Identify unnecessary expenses or adjust lifestyle choices.
Supplement Your Income: Just because you’re retired doesn’t mean you can’t work. Consider:
- Part-time work or freelancing
- Starting a small business
- Monetizing a hobby
- Exploring investment options with tax-equivalent yield potential
Maximize Tax Savings: Use a federal income tax calculator to assess potential tax savings and avoid paying more tax than necessary.
Plan for Systematic Withdrawals: Ensure you are withdrawing funds at a sustainable rate while maximizing financial needs over time.

retired working income — Retirement can be great when you have a handle on your budget

The Importance of Financial Flexibility

A well-balanced financial plan is not static. You need to monitor your financial situation regularly and adjust as necessary. The goal is to sustain your lifestyle while preserving as much of your net worth as possible.

The Reality of Tax-Advantaged Retirement Savings

Part of your retirement savings located in tax-advantaged plans such as 401(k)s and rollover 401(k)s into a traditional IRA belongs to the government. This means when you withdraw interest, dividends, or principal, you will owe taxes based on your total income. You cannot look at a fund of, for example, $300,000 as entirely yours. Additionally, you will be subject to mandatory distributions at age 73.

The best way to reduce your tax burden is to create a plan to transfer as much of the funds in your tax-advantaged plans as possible each year into a Roth IRA, which is not subject to income tax. The dividends generated from a Roth IRA, not being subject to federal income tax, will provide you with greater income.

We have created a special tool to help you determine how much you can transfer each year without paying tax or paying tax at the lowest rate possible. Click the button at the bottom of the article.

The Role of Savings in Retirement

Your current savings serve two primary functions:

Emergency Fund: Unplanned expenses can arise, such as health care costs or major home repairs. Having liquid savings helps avoid accumulating much debt.
Income Supplementation: If your fixed income sources aren’t enough, your savings can help fill the gap. However, withdrawing too much too soon can lead to financial instability.

Planning for the Future

Whether you are adjusting your expenses or seeking additional income, staying proactive is key. Use the budget tool provided at the end of this article to:

Evaluate your current cash flow and financial situation.
Compare your total income with your financial needs.
Plan for long-term impact and estate tax liability.
Identify whether you need additional financial decisions to enhance retirement security.

Just because you’ve left your career job doesn’t mean you can’t continue to earn income in other ways. If you’re physically capable and willing, there are several opportunities to supplement your retirement income:

dog walking business — Dog walking business earning extra income after retirement

Earning Additional Income After Retirement

Starting a Business – Many retirees successfully launch small businesses based on their skills, hobbies, or interests. Whether it’s consulting, freelancing, or selling handmade goods online, entrepreneurship can provide both financial benefits and personal fulfillment. Check out our entire series of articles about Starting a Business After Retirement here.
Part-Time or Seasonal Work – Consider working a few hours a week in a job that suits your lifestyle, such as tutoring, customer service, or working in a local shop. Seasonal jobs, such as tax preparation or retail during the holidays, can provide extra income without a long-term commitment.
Monetizing Your Skills – If you have expertise in a particular field, you can teach, mentor, or provide coaching services. Platforms like Udemy, YouTube, and local community colleges offer ways to earn from your knowledge.
Rental Income – If you have an extra room, a second home, or investment properties, renting them out can generate passive income. Short-term rentals through platforms like Airbnb can be an option.
Gig Economy Opportunities – Driving for rideshare companies, delivering groceries, pet sitting, or other gig jobs allows flexible schedules while bringing in additional money.
Renting rooms in your home – Consider a roommate if you are single. The additional income may be important and the company almost as important.

Reviewing Expenses and Selling Assets

While it’s essential to evaluate expenses in retirement, don’t overlook the potential to free up cash by selling assets that have become unnecessary liabilities. Consider:

Selling an Extra Car – If you and your spouse no longer need two vehicles, selling one can reduce insurance, maintenance, and registration costs.
Downsizing RVs, Boats, and Motorcycles – If you’re no longer using your motorhome, boat, or other recreational vehicles, selling them can eliminate ongoing expenses like storage, insurance, and upkeep.
Clearing Out the Garage – Tools, equipment, and collectibles you no longer need can be sold through online marketplaces, garage sales, or consignment shops.
Selling Unused Property – If you have a vacation home or a cabin in the mountains that you rarely visit, selling it can free up equity, reduce property taxes, and eliminate maintenance costs.

Your Family

Every year you give family money for birthdays, anniversaries, Christmas, and more. With the exception of grandchildren, the other family members are adults and are probably gainfully employed. If you see that your expenses are exceeding your income, it’s time to have a conversation with the adults.

That $25 birthday money actually means little to someone working and earning a good living. You feel good at the time but after trying to fill the gap that $25 left creates anxiety. Talk to your adult children and others and explain that you can no longer pay money for events.

You will to the extent possible attend birthdays and events or call. Your adult relative will absolutely understand and probably feel better that you have stopped sending money you do not have. Don’t feel guilty, you will feel worse if you find yourself borrowing money from them and not being able to pay it back.

Finding the Right Balance

A comfortable retirement isn’t just about cutting costs—it’s about maintaining financial stability while enjoying your lifestyle. Exploring new income opportunities and selling underutilized assets can help you achieve financial security without compromising your quality of life.

Use our budget tool and tax-free withdrawal calculator below to reevaluate your financial position. They will help you determine exactly how much retirement income you need by starting with expenses, adding your income, and revealing any shortfall or surplus.

The tax-free withdrawal calculator will help you reduce the tax you will own when withdrawing funds from your Traditional IRA and 401(k) after age 59.5. Take control of your financial future to ensure your savings last as long as you do.

Frequently Asked Questions

1. How do I calculate how long my retirement savings will last?

To estimate how long your retirement savings will last, divide your total savings by your expected annual expenses. Use a retirement calculator to factor in inflation, investment returns, and withdrawal rates for a more accurate projection.

2. What is the 4% rule for retirement withdrawals?

The 4% rule suggests withdrawing 4% of your retirement nest egg annually to ensure your savings last at least 30 years. While it’s a useful guideline, consider market fluctuations, life expectancy, and unexpected expenses when planning your withdrawals.

3. How does inflation impact retirement savings?

Inflation reduces the purchasing power of your money over time. A 3% annual inflation rate can significantly affect how long your retirement income lasts. Consider investing in inflation-protected securities and adjusting withdrawals to account for rising costs.

4. How can I make my retirement savings last longer?

To extend the life of your retirement funds, consider adjusting your spending, investing in dividend-paying stocks, delaying Social Security benefits, and exploring part-time work or passive income streams such as rental properties.

5. Should I work part-time in retirement to supplement my savings?

Yes! Earning extra income in retirement through freelancing, consulting, remote work, or side hustles can reduce your reliance on savings. Part-time jobs for retirees can also provide financial security and personal fulfillment.

6. How does Social Security affect my retirement savings?

Your Social Security benefits can reduce the amount you need to withdraw from your IRA or 401(k). Delaying benefits until age 70 can increase your monthly payments by up to 32%, helping you stretch your retirement budget.

7. What investment strategies can help my savings last in retirement?

A well-balanced retirement investment portfolio should include a mix of stocks, bonds, real estate, and annuities to ensure long-term financial stability. Diversifying investments helps protect your nest egg from market downturns.

8. What are the risks of outliving my retirement savings?

One of the biggest concerns in retirement is longevity risk—outliving your money. Planning for a longer lifespan, maintaining a retirement income plan, and having a backup emergency fund can help prevent financial shortfalls.

9. How can I reduce taxes on my retirement withdrawals?

Tax-efficient withdrawal strategies can help your retirement savings last longer. Withdraw from taxable accounts first, then from Roth IRAs and traditional IRAs to minimize tax burdens. Tax-free retirement income options, such as municipal bonds and Roth conversions, can also be beneficial.

10. Should I downsize or sell assets to extend my retirement savings?

If maintaining a large home, second property, or unused assets is costly, downsizing or selling can reduce monthly expenses, free up cash flow, and lower property taxes and maintenance costs. Selling unnecessary assets, like an extra car, RV, or vacation home, can provide additional financial security.