Will the money last?

Start with the income floor

Some bills you must pay: housing, food, utilities, insurance and healthcare. Others make retirement worth looking forward to: travel, grandchildren, hobbies and giving. A good plan has room for both.

We start by asking how much of your essential bills are covered by income that does not depend on the market, like Social Security and pensions. We call that your income floor. If there is a gap, many retirees choose to close it so their essentials do not depend on the market.

Then decide how much your savings can reasonably provide

A common starting point is to draw about 3% to 4% of savings a year, for money meant to last around 30 years. Our Income Estimator uses that range. It is only a starting point, because the right amount depends on your age, your other income and how your money is invested.

Four things that can shorten a retirement plan

• A long life. Many people now spend 25 or 30 years in retirement. Living longer is a blessing, and the plan has to be ready for it.
• A bad market early on. Losses in the first years of retirement, while you are already withdrawing, can do more damage than the same losses later. Planners call this sequence of returns risk.
• Rising prices. Inflation in the United States has averaged around 3% a year over the last century. Even modest inflation adds up over a long retirement.
• Taxes. Two retirees with the same income can keep very different amounts, depending on where the income comes from.

A plan, not a junk drawer

Many people arrive with a drawer full of accounts opened over a lifetime. Each one made sense when it was opened. Together, they rarely add up to a plan. The work is to give every account a job: which dollars pay this year's bills, which dollars cover the next several years, and which dollars have time to grow.

This page is educational. It is not tax, legal or investment advice, and rules change. We check the current rules against your own situation before you decide anything.