top of page
  • Writer's pictureMegan Waters, CFP®

How Long Will My Investments Last in Retirement?

Updated: May 21

How Long Will My Investments Last in Retirement?

You've worked hard your entire life to save for retirement, and the last thing you want is for those funds to run out while you're enjoying your post-working years.

Naturally, there are ways to budget for retirement that can ensure you cover both your needs and wants. However, if you don't have a solid understanding of how to make your money last in retirement, there's a risk of depleting your funds.

Planning for retirement is absolutely crucial as you approach and enter your golden years. It involves diligent saving and wise investing to secure your financial future.

One of the main concerns for retirees is making their investments last throughout retirement. This calls for careful consideration of factors such as withdrawal rates, investment returns, and the impact of inflation.

If you want help making the right decisions for retirement, be sure to download our free retirement cheat sheets with hundreds of tips on making your money last.

After all, transitioning from a regular paycheck to relying on investments can bring about concerns regarding the longevity of those funds. It's important to strike a balance between enjoying your retirement and ensuring that your money doesn't run out prematurely. Failing to plan accordingly can result in financial stress and a lower quality of life.

That's why it's so important to know: How long will my investments last in retirement?

Working with a financial planner can greatly assist you in creating a retirement plan that aligns with your unique financial situation, goals, and risk tolerance. This personalized approach can help maximize the potential of your retirement savings and investments.

If you're interested, you can even get a free consultation with a financial advisor at our firm, Covenant Wealth Advisors, to start shaping your retirement budget.

Understanding Retirement Investment Longevity

When you think about your ideal life in retirement, can you make it work financially?

How can your investments provide a steady stream of income for you as long as you need it?

This planning should take into account factors such as inflation, market risks, your withdrawal rate, and expenses, such as healthcare and taxes.

Most Common Expenses for Retirees

Below are some of the most common expenses for retirees which can impact your nest egg:


Healthcare expenses are often one of the biggest concerns, as medical costs increase with age. Medicare can help cover some expenses, but you may still need to budget for premiums, deductibles, and out-of-pocket costs. Long-term care is another expense to consider, as it can be costly and isn’t covered by Medicare in most cases.


Housing is another big expense for retirees. While you may have paid off your mortgage, you’ll still need to budget for property taxes, insurance, maintenance, and possibly renovations to accommodate changing needs.


Leisure activities are an important part of retirement for many people, but they can also be a big expense. Travel, hobbies, dining out, and entertainment can all add up, so retirees should budget accordingly. It's good to strike a balance between enjoying retirement and ensuring that expenses are sustainable over the long term.

Of course, your expenses will be largely dependent upon the state you reside and the taxes you pay. Here's our in depth analysis of the most tax-friendly states for retirees.

How Inflation Affects Retirees

Inflation is like a sneaky thief that can slowly take away your money’s buying power. When you’re retired, this can be a big problem because you’re usually living on a fixed income, like Social Security or retirement savings. If prices keep going up, the same amount of money buys less and less over time. This means that what you used to spend on groceries, healthcare, or other necessities might not be enough in a few years.

Think of it this way: if a loaf of bread costs $2 today but goes up to $3 in a few years, your money won’t stretch as far. This is why it’s important to have a plan to deal with inflation during retirement.

How Inflation Affects Healthcare

Healthcare expenses can move up with and even outpace inflation. As a result, retirees need to budget more for medical expenses as they age. This can include higher premiums, deductibles, and out-of-pocket costs for healthcare and medications.

Long-term healthcare inflation has averaged 5.13% per year according to y-charts.

How Inflation Affects Housing

Housing costs such as property taxes, insurance, and maintenance costs tend to increase over time. If you own your home you may find that these expenses eat into your budget more than expected.

The S&P/Case-Shiller index is an important measure of national housing prices. The chart below uses the 20-city index. As you can see, home prices are back near historic levels even though there have been fewer transactions.

S&P CoreLogic Case-Shiller Index through May 2024

How Inflation Affects Leisure

Inflation can impact the cost of many activities, as prices for travel, dining out, and entertainment can rise. You may need to adjust your spending or find more cost-effective ways to enjoy retirement.

Over the past several years, air travel has rebounded as travels bans have been lifted. Activity is now back to pre-pandemic levels which is good news for economic growth but bad news for retirees looking to splurge on a great trip.

Number of daily travelers screened in airports since March 1, 2020

Whether travel expands further will depend on business activity and personal travel.

Retirement Budgeting Best Practices

Many retirees underestimate their expenses and may end up running out of money. However, a budget can help you estimate and plan for these expenses. It's also important to account for unexpected expenses, such as home repairs or medical emergencies.

Here are a couple of best practices to consider:

  • 4% Rule: The 4% rule is a guideline used to determine a safe withdrawal rate from retirement savings. It suggests that if you withdraw 4% of your retirement savings each year, your savings should last for at least 30 years.

  • 25x Rule: The 25x rule is a simple way to estimate how much you need to save for retirement. It suggests that you should aim to save 25 times your annual expenses by the time you retire. For example, if your annual expenses are $50,000, you would need to save $1.25 million (25 x $50,000) to have enough money in retirement.

Explore our 15 Free Retirement Planning Checklists to help get ahead of your retirement planning.

Estimating Retirement Income

Estimating your maximum withdrawal rate over a 30 year retirement period can be a bit daunting.

This is because there are so many different variables to consider. Moreover, stock and bond market returns can differ drastically depending upon when you retire.

In the chart below, we illustrate the maximum withdrawal rate for a hypothetical portfolio made of 60% stocks and 40% bonds.

Maximum withdrawal rates in retirement based on a 30 year period from 1900 to 2024.

This chart shows the 30-year safe withdrawal rates for a hypothetical 60% stock (S&P 500 Index) and 40% bond (Bloomberg Aggregate Bond Index) portfolio. No fees or expenses are included. You cannot invest directly in an index. The safe withdrawal rate is calculated as the inflation-adjusted maximum share of the initial portfolio that can be withdrawn at year end for each of the 30-years without the portfolio value dropping to zero. The portfolio is rebalanced annually at year end. The estimated bars, where a 30-year period of realized returns is not available, use as many years of real returns as is available to calculate the safe withdrawal rate. Missing periods are assumed to have a nominal 60/40 portfolio return of 10% and annual inflation of 3.5%. Date Range: 1900 to 2015. Source: Clearnomics, Robert Shiller


Over time, the inflation adjusted maximum safe withdrawal rate has ranged from near 4% to over 12% based on a 60/40 stock/bond portfolio.

The variance in safe withdrawal rates shows how the average returns over a retirement period impact how individuals can draw down on their portfolios.

The 4% rule may act as a good starting point but should only be used as a simple rule of thumb!

That's where Monte Carlo Analysis comes in handy.

Monte Carlo Analysis is a way to simulate a range of possible outcomes for your retirement. It can also help you estimate your investment income and it’s named after the famous Monte Carlo area in Monaco, known for its gambling. Similar to these games of chance, Monte Carlo Analysis relies on sampling to generate a range of possible outcomes.

For retirement planning, advisors can use Monte Carlo Analysis to simulate different scenarios. This can help assess the likelihood of meeting financial goals. It can run simulations based on various assumptions, such as investment returns, inflation rates, and spending levels. Each simulation represents a possible future scenario, and by running thousands of simulations, the analysis can provide a range of outcomes.

Monte Carlo Analysis can help investors and planners understand the risks with their financial plans. It allows them to assess the impact of different variables and adjust their strategies to improve the likelihood of achieving their goals.

What is monte carlo analysis for retirement?

How Does Monte Carlo Analysis Work?

Monte Carlo Analysis works by simulating possible future scenarios based on different variables. These can include:

  • Initial savings

  • Annual savings rate

  • Expected rate of return

  • Inflation rate

  • Retirement age

  • Life expectancy

Other variables can include your income growth rate, spending goals, and other income or expenses such as taxes in retirement.

For each simulation, Monte Carlo Analysis selects values for these variables from specified ranges (e.g., ±1 standard deviation from the mean for the expected rate of return). It can then calculate the projected retirement savings at the end of each year, taking into account contributions, returns, and withdrawals.

By running thousands of simulations, Monte Carlo Analysis gives a distribution of possible outcomes. This can help you find the probability of achieving your retirement goals. This helps you understand potential outcomes and make better decisions about your retirement planning.

Benefits of Monte Carlo Analysis

benefits of monte carlo analysis

Monte Carlo Analysis can offer many benefits when planning for your retirement:

  • Highlighting Range of Outcomes: It can give a clearer picture of the range of possible outcomes for your retirement savings. It can help consider factors such as market volatility and other uncertainties.

  • Assessing Likelihood of Success: By running many simulations, Monte Carlo Analysis can assess the likelihood of achieving your retirement goals. It can help you find potential risks and take steps to mitigate them, such as adjusting your savings rate or investment strategy.

  • Scenario Planning: Monte Carlo Analysis allows you to test different scenarios and assumptions to see how they might impact your retirement savings.

  • Quantifying Risks: It quantifies the risks with your retirement plan, giving you a better understanding of the probability of falling short of your goals.

Limitations of the Monte Carlo Analysis

Monte Carlo Analysis, while a valuable tool, has limitations to be aware of:

  • Market Assumptions: It assumes that future market returns will follow a certain distribution, such as a normal distribution. However, actual market returns can vary widely and may not always adhere to these assumptions.

  • Efficient Markets: Monte Carlo Analysis assumes perfectly efficient markets, which may not reflect the real world. Market inefficiencies, unexpected events, and other factors can impact investment returns and outcomes.

  • Complexity: Monte Carlo Analysis can be complex and may require expertise to interpret and apply.

  • No Guarantees: Like any financial tool, Monte Carlo Analysis cannot guarantee outcomes. It provides probabilities based on the assumptions and inputs, but actual results may vary.

Given these limitations, it’s best to use experts to help with Monte Carlo Analysis. A financial advisor can help interpret the results and provide context based on your financial situation. Experts can give guidance on how to incorporate the analysis into your retirement planning.

If you wish to perform a Monte Carlo Analysis on your retirement plan, request a free retirement assessment from one of our financial advisors.

Strategies for Maximizing Retirement Income

To maximize retirement income, retirees can use several strategies.

One approach is delaying Social Security benefits, which can increase monthly payments for each year postponed.

Another option is to annuitize a portion of retirement savings, providing a guaranteed income stream for life or a specific period.

Part-time work can supplement retirement income and bridge the gap before claiming Social Security benefits. Even an extra $20,000 to $40,000 per year can make a tremendous impact on making your retirement savings last.

Additionally, tax-efficient withdrawal strategies, such as strategically timing withdrawals from different accounts, can also maximize income. Health Savings Accounts (HSAs) are also valuable, offering tax-deductible contributions and tax-free withdrawals for qualified medical expenses.

Reviewing and adjusting strategies based on life changes can also help maintain financial health in retirement. Life events, market conditions, and personal goals can all change over time. This can affect the suitability of your investment strategies.

By regularly reviewing your portfolio and adjusting it as needed, you can better align with your goals and risk tolerance.

Advisory firms, like Covenant Wealth Advisors in Virginia, can help you develop an investment strategy tailored to your circumstances. They can also provide ongoing monitoring and adjustments to your portfolio, taking into account changes in the market and your personal situation. If you are looking for insights and guidance to help you make better financial decisions, speak with one of our financial advisors today and get a free retirement assessment.


Effective retirement planning requires an approach that considers many factors. This includes investing, budgeting, and income strategies. Understanding risks with markets, inflation, and longevity is also key to planning for a financially secure retirement. Asset allocation, diversification, and regular portfolio reviews can help you manage investment risks and maximize retirement income.

Tools like Monte Carlo Analysis can also help you estimate retirement outcomes by simulating market scenarios. Consulting with a financial advisor can provide valuable guidance and help you navigate complex financial decisions.

By planning for retirement today, regularly reviewing and adjusting your strategies, and seeking professional advice, you can improve your financial security.

We hope that you’ve found this article valuable when it comes to learning about “How Long Will My Investments Last in Retirement?”

If you’re interested in reading more, please subscribe below to get alerted of new articles as we write them.


Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.


Don't Miss Out

Join 8,067+ individuals who receive our retirement insights by email and get a free copy of "Key Issues To Consider Before You Retire."

bottom of page