How to calculate how long your savings will last
Estimating retirement sustainability requires calculating the balance between two opposing forces: cash withdrawals that deplete your principal, and compound interest / investment growth that replenishes your account balance every month. Even after you stop working, keeping your savings in conservative index funds, bonds, or high-yield certificates of deposit dramatically extends the longevity of your money.
The mathematical drawdown formula
Where:
- P: Current portfolio balance ($).
- W: Monthly withdrawal amount ($).
- r: Monthly investment return rate (Annual return % ÷ 1200).
- N: Total number of months until the balance reaches zero.
How long will $100K to $1M last? (Reference comparison table)
| Starting Balance | $1,000 / month (5% return) | $2,000 / month (5% return) | $3,000 / month (5% return) | $4,000 / month (5% return) |
|---|---|---|---|---|
| $100,000 | 11 yrs 0 mo ($132K paid) | 4 yrs 9 mo ($113K paid) | 3 yrs 0 mo ($108K paid) | 2 yrs 2 mo ($105K paid) |
| $250,000 | 35 yrs 5 mo ($425K paid) | 14 yrs 7 mo ($350K paid) | 8 yrs 10 mo ($318K paid) | 6 yrs 3 mo ($299K paid) |
| $500,000 | Indefinite (surplus) | 35 yrs 5 mo ($850K paid) | 20 yrs 4 mo ($731K paid) | 14 yrs 7 mo ($700K paid) |
| $750,000 | Indefinite (surplus) | Indefinite (surplus) | 35 yrs 5 mo ($1.27M paid) | 23 yrs 10 mo ($1.14M paid) |
| $1,000,000 | Indefinite (surplus) | Indefinite (surplus) | Indefinite (surplus) | 35 yrs 5 mo ($1.70M paid) |
What is the 4% retirement rule?
Originating from the landmark Trinity study, the 4% rule states that an investor who withdraws 4% of their initial portfolio value in the first year of retirement, and adjusts subsequent withdrawals for inflation, has a 95%+ probability of having their money last at least 30 years across historical market conditions. For instance, on a $500,000 portfolio, 4% equals an initial annual withdrawal of $20,000 ($1,667 per month).
Key factors that impact your savings longevity
- Compound Investment Returns: A conservative 5% to 7% return can double the number of years your money lasts compared to holding cash in zero-interest checking accounts.
- Inflation: Over a 20-to-30 year retirement, a 2.5% annual inflation rate substantially erodes purchasing power, requiring higher monthly withdrawals to maintain your standard of living.
- Sequence of Returns Risk: Experiencing sharp market downturns during the first 3 to 5 years of retirement depletes capital faster than downturns later in retirement. Maintaining a 1-to-2 year cash buffer helps shield against selling investments at market lows.
Frequently asked questions about retirement savings
How long will $500,000 last in retirement?
If you withdraw $2,000 per month and earn a modest 5% annual return, $500,000 will last over 35 years. If you withdraw $3,000 per month, it will last 20 years and 4 months.
What is the difference between this and a compound interest calculator?
A compound interest calculator estimates wealth accumulation (saving and adding money). This calculator estimates decumulation (drawdown), modeling how your nest egg generates interest while money is being actively withdrawn.
What is Required Minimum Distribution (RMD)?
Under US IRS rules, individuals who reach age 73 must begin taking annual Required Minimum Distributions from traditional IRAs and 401(k) accounts based on IRS life expectancy tables to ensure deferred tax obligations are met.
Created and calculation-tested by Velour Trends · Updated 9 November 2026. Standard actuarial annuity drawdown equations verified. Report a calculation issue.