Kuvare GILICO Logo-White-2C
Cheerful mature couple managing retirement planning together

Will Your Money Last a Lifetime? How to Calculate—and Spend—With Confidence

Your money can last a lifetime in retirement when you understand how much income your savings can safely produce, plan for different market and longevity scenarios, and build confidence in moving from saving to spending.

While most people look forward to a carefree retirement, only half of U.S. pre-retirees have calculated just how much they need to save for retirement. But here’s what’s even more surprising: many who have saved diligently struggle with an entirely different challenge: giving themselves permission to spend it.

Whether your dreams involve traveling to new destinations, spending time with grandchildren, fishing or lending a hand at a favorite charity, it takes thoughtful and strategic planning to help ensure your savings stretch throughout the entirety of your retirement.

But it also requires something else: the confidence to transition from a lifetime of saving to actually enjoying what you’ve built.

What is the Hardest Part of Retirement Transitions? Learning to Spend

After 30 or 40 years of being rewarded for saving, you’re suddenly supposed to do the opposite. This shift triggers what financial psychologists call “spending anxiety” — the fear that any withdrawal might be the one that starts you down the path of running out of money.

This concern is very real. Unlike your working years when you had that steady paycheck coming in, retirement income may seem less certain and therefore, cause some to be overly cautious about spending.

But here’s the ironic part; excessive caution can lead many retirees to underspend in retirement, missing out on experiences and joys they’ve earned (and planned for).

The key to a smooth retirement transition isn’t just knowing how much you have—it’s knowing how much sustainable income you can create from what you’ve saved. That clarity transforms concern into confidence, allowing you to truly live in retirement rather than merely exist with funds you’re afraid to touch.

Calculating Your Income Needs in Retirement

Start with your lifestyle vision

Before diving into retirement calculators and income withdrawal rates, first get clear on what you actually want your retirement to look like. Consider these questions:

  • Will you travel extensively in your early retirement years, or would you prefer to stay close to home?
  • Do you plan to downsize your home, or age in place with potential modifications?
  • Will you relocate to be near family or to a lower cost-of-living area?
  • What hobbies or activities do you want to pursue that might cost money?

Understanding your vision matters because your spending patterns will likely follow what experts call the “retirement spending smile.”

The “retirement spending smile” is where spending is higher in early active years when you’re traveling and pursuing new activities, lower in the middle decades when you’ve settled into routines, then potentially higher again for healthcare needs in later years.

Calculating Longevity Spending Smile

Use retirement calculators strategically

Retirement calculators can serve as useful tools to gauge not only how much money you may need for retirement but also how long your retirement savings might last.

However, don’t rely on a single calculation. Run multiple scenarios:

  • Best case: Market performs well, you live to average life expectancy
  • Worst case: Market downturn early in retirement, you live to 95+
  • Most likely case: Something in between with moderate returns and longevity

This scenario planning helps you understand your margin of safety and identify which assumptions have the biggest impact on your outcomes.

Understanding the 4% Rule—and Its Limitations

One commonly used and simple approach to making money last throughout retirement is based on the 4% Rule, which suggests withdrawing 4% of your initial retirement savings annually, adjusted for inflation.

Here’s how it works in practice: If you retire with $1 million in savings, you’d withdraw $40,000 in your first year of retirement. In year two, you’d adjust that $40,000 for inflation—if inflation was 3%, you’d withdraw $41,200. The following year, you’d adjust that new amount for inflation again, and so on.

This general rule aims to provide direction for a sustainable income stream while preserving savings, based on historical market performance over 30-year periods.

However, the 4% Rule has important considerations:

  • It was designed for a 30-year retirement (you may need yours to last longer, especially if you retire early)
  • It doesn’t account for spending variances or taxes
  • Retiring into a down market creates “sequence of returns risk”—if your portfolio drops significantly in your first year of retirement and you continue withdrawing, you may deplete your savings faster than the historical averages suggest
  • It doesn’t account for pension income, Social Security, annuities, or other guaranteed income sources you may have


More sophisticated approaches use dynamic withdrawal strategies that adjust based on portfolio performance and your spending patterns. For instance, you might withdraw 5% in strong market years and 3% in down years or increase spending in your healthy early retirement years and reduce it later. These flexible approaches can help your savings last longer while allowing you to enjoy more when you’re most able.

Building a Layered Income Strategy to Help Your Money Last

When asking “Will my money last?” the answer depends not just on how much you’ve saved, but on how you strategically deploy those savings to create sustainable income.

Successful retirement transitions involve creating multiple income streams that work together, reducing your reliance on any single source and extending the life of your portfolio.

Think of it as building a financial foundation with several supporting pillars. If one source underperforms or faces challenges, the others can help maintain your stability.

Understanding Your Income Sources

Most retirees draw from a combination of:

1

Social Security Benefits

These form the foundation for many U.S. retirees, providing a guaranteed, inflation-adjusted income stream for life. The timing of when you claim—anywhere between age 62 and 70—permanently affects your monthly benefit amount. For married couples, coordinating when each spouse starts their benefits can significantly impact both current household income and future survivor benefits.

Pension Income

For those fortunate enough to have it, this provides another layer of guaranteed income. If you have a pension, you’ll face decisions about lump sum versus monthly payments, and whether to elect survivor benefits for your spouse.

Retirement Accounts

Accounts like 401(k)s, IRAs, and 403(b)s represent the savings you’ve accumulated over your working years. Because many are funded with pre-tax dollars, withdrawals in retirement are typically taxable as income. These accounts offer flexibility in how much you withdraw and when, but they require careful management to help ensure they last, particularly since they may be affected by market volatility.

Personal Savings and Investments

Savings and investments in taxable accounts provide additional flexibility. These funds may be available without withdrawal penalties or restrictions, making them useful for unexpected expenses or opportunities that arise.

Annuities with Lifetime Income Riders

These can help fill the gap between guaranteed income from Social Security or pensions and actual expenses. Like many retirement accounts, annuities grow tax-deferred, meaning you generally pay income taxes on earnings when you withdraw them. By converting a portion of your savings into a guaranteed* income stream, you can receive consistent income payments on a reliable schedule to help cover costs, regardless of how long you live or how markets perform.

Understanding Your Income Sources

One of the biggest wildcards in retirement is healthcare costs. A healthy 65-year-old couple retiring in 2025 could spend around $588,000 on health care throughout retirement – $275,000 for men (assuming a lifespan of 88 years) and $313,000 for women (assuming a lifespan of 90 years).1

Medicare covers many core needs, but premiums, deductibles, and uncovered services mean retirees must budget carefully for health costs when building sustainable income plans.

Long-term care represents a separate concern. Medicare doesn’t cover most long-term care costs.

Whether you self-insure, purchase long-term care insurance, or use an optional rider on an annuity or life insurance policy to help offset these costs, factoring these potential needs into your income planning is essential.

Tax-smart withdrawal sequencing

Which accounts you pull money from—and when—can extend how long your money lasts, making the difference between concern and confidence.

Financial planners may suggest withdrawing in this order2:

  1. Taxable accounts (brokerage accounts, savings)
  2. Tax-deferred accounts (traditional IRAs, 401(k)s)
  3. Roth accounts last (Roth IRAs, Roth 401(k)s)


Working with your financial professional to model different withdrawal sequences can potentially save tens of thousands in taxes over a 30-year retirement.

Avoiding Common Retirement Income Traps

There are common traps people can fall into as they go into retirement—when going from saving to drawing a retirement income.

Underestimating longevity: If you retire at 65, there’s a good chance at least one spouse in a married couple will live into their 90s. Planning only to age 85 could leave you short by a decade or more.

Ignoring inflation: Even modest 2-3% annual inflation compounds significantly. What costs $50,000 today will cost about $90,000 in 20 years at 3% inflation. Your income strategy needs to keep pace.

Taking too much risk—or too little: An overly conservative portfolio may not generate enough growth to sustain withdrawals over 30+ years. But taking too much risk, especially early in retirement, exposes you to sequence-of-returns risk.

Forgetting about taxes: Many retirees are surprised by how much of their retirement income is taxable. Social Security income may be taxed, traditional IRA withdrawals are fully taxable, and investment income adds to your tax bill. Factor in your net, after-tax income when planning.

Turning Calculations into Retirement Confidence

Knowing the numbers is important. But true confidence in retirement comes from transforming those calculations into a living income plan that addresses both your practical needs and your emotional comfort.

Give yourself permission to spend

Your retirement savings aren’t meant to be admired from afar—they’re meant to fund the retirement you’ve dreamed about.

One simple way to feel more comfortable spending is to think about your money in three groups:

  • Income now (next 1-5 years)
  • Income soon (years 5-15)
  • Income later and legacy (15+ years and beyond)


Seeing your savings this way can make withdrawals feel less scary. You’re spending from the “now” group, while the others continue working in the background to support the years ahead.

Building Your Retirement Confidence Through Guaranteed* Income

One of the most effective ways to ease the transition from saving to spending is to create a floor of guaranteed* income that covers your essential expenses. When you know your basic needs are covered regardless of market performance, you gain the freedom to be more flexible with your remaining assets.

A guaranteed income floor typically comes from:

  • Social Security benefits (optimized for maximum payout)
  • Pension payments (if available)
  • Annuities with lifetime income riders

Once your essentials are covered by guaranteed sources, the anxiety about market volatility diminishes significantly. You’re not watching your portfolio balance daily, wondering if you can still afford groceries or healthcare. Instead, you’re making thoughtful decisions about discretionary spending—travel, gifts, hobbies—knowing your foundation is secure.

Take the Next Step

If you are just beginning to fill your nest egg or if you have a head start on funding your golden years, now is the time to meet with your financial professional to determine how long your retirement savings will last—and to build the confidence to actually enjoy it.

Key Takeaways – Look to your financial professional to help:

  • Calculate realistic income needs aligned with your specific retirement vision and spending patterns
  • Identify gaps between guaranteed income sources and lifestyle expenses
  • Model different scenarios including market downturns and longevity beyond expectations
  • Explore income diversification strategies including annuity options with lifetime income guarantees*
  • Develop a tax-efficient withdrawal strategy that maximizes your after-tax income
  • Create an annual review process to adjust your plan as circumstances change

The goal isn’t just to make your money last—it’s to ensure your retirement is everything you’ve worked for, free from constant concern about whether you can afford to actually live it.

A smooth retirement transition happens when calculation meets confidence, when your spreadsheet transforms into sustainable paychecks, and when you give yourself permission to be the beneficiary of your own lifelong discipline and hard work.

Related Posts

1 2025 Milliman Retiree Health Cost Index

2 Withdrawal Sequencing: Avoiding the Pitfalls of Retirement Distribution Order – Retirement Researcher

* Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer.

GIPUB-007 02-26

Tagged