At a 4% withdrawal rate, a typical retirement portfolio lasts 30 years or more. Withdraw 5% and you are looking at roughly 20 to 26 years. At 6%, plan on 15 to 20. The exact number depends on two things: your investment returns after inflation, and how disciplined you stay about the withdrawal amount.
Most sites answer this question with a calculator widget and no explanation of the math it runs. This article shows the actual arithmetic, including a table of survival years and a worked example with $500,000. You can also test your own balance in the free retirement calculator, which does the same math instantly.
What the 4% rule actually says
The rule comes from the Trinity study, a 1998 paper by finance professors at Trinity University who tested withdrawal strategies against US market data going back to 1926. Their finding: a retiree who took out 4% of a stock and bond portfolio in year one, then adjusted that dollar amount for inflation every year afterward, almost never ran out of money within 30 years.
Flip the rule around and you get the familiar savings target of 25 times annual spending. Spend $40,000 a year, save $1 million. We covered that side of the equation in how much do you need to retire. This article is about the other end, when the paychecks stop and the withdrawals begin.
Two honest caveats. The study used US historical returns, which were unusually good by world standards. And 30 years was the test window, so anyone retiring early needs a rate lower than 4%.
How long your money lasts at 4, 5, and 6 percent
The table below uses real returns, meaning returns after inflation. A portfolio earning 7% while inflation runs 3% has a real return of roughly 4%. Balanced portfolios have historically managed real returns somewhere between 2% and 4%. Conservative ones sit lower.
| Real return (after inflation) | 4% withdrawal | 5% withdrawal | 6% withdrawal |
|---|---|---|---|
| 1% | 29 years | 22 years | 18 years |
| 2% | 35 years | 26 years | 20 years |
| 3% | 47 years | 31 years | 23 years |
| 4% | Never runs out | 41 years | 28 years |
Read that middle row for a second. At a 2% real return, moving from a 4% to a 6% withdrawal rate costs you 15 years of income. The rate you pick matters more than almost any investment decision you make after retiring.
One assumption worth naming: the table treats returns as steady. Markets are not steady, and that gap is where retirements actually fail. More on that below.
A worked example: $500,000, year by year
Say you retire with $500,000 and follow the 4% rule. Here is how the first three years play out with 6% nominal growth and 3% inflation.
Year one: withdraw 4% of $500,000, which is $20,000, or about $1,667 a month. The remaining $480,000 grows 6% to $508,800.
Year two: raise the withdrawal 3% for inflation, to $20,600. That leaves $488,200, which grows to roughly $517,500.
Year three: withdraw $21,218. The balance still climbs, ending near $526,000.
Notice the balance rises even though the withdrawals keep growing. When returns beat spending, a portfolio can outrun its owner for decades. Against the table above, $500,000 at a 2% real return lasts about 35 years at a 4% rate. Push the rate to 5% ($25,000 a year) and it drops to about 26 years, and at 6% ($30,000 a year) to about 20.
The math is currency-blind, by the way. Swap dollars for rupees and 4% of Rs 2 crore is Rs 8 lakh a year. The survival years in the table do not change.
Why the order of returns matters
Averages hide the danger. Two retirees can earn the same average return over 30 years and end up in wildly different places, because the one who hits a bear market early has to sell more shares at low prices to fund identical withdrawals. Planners call this sequence of returns risk, and it is the main reason the word “safe” shows up in retirement spend-down research at all.
Run the $500,000 example again, but let the market fall 20% in year one. After the $20,000 withdrawal and the crash, you hold $384,000. The year two withdrawal of $20,600 now equals 5.4% of the portfolio. You never changed the plan. The market changed it for you.
A cheap defense: skip the inflation raise in any year the portfolio lost money. It feels trivial. Over a full retirement it can add years of life to the plan.
How to make your savings last longer
Every fix is a version of one idea: shrink the gap between what the portfolio earns and what you take out.
- Trim the rate. Withdrawing 3.5% instead of 4% turns 35 years into well over 40 in the middle scenarios.
- Spend flexibly. Cutting withdrawals 10% during down markets protects more capital than almost any product you can buy.
- Work one more year. That is one extra year of growth and one fewer year of withdrawals, a double win.
- Watch fees. A 1% annual fee behaves exactly like raising your withdrawal rate from 4% to 5%. (Honestly, this is the least painful fix on the list.)
- Delay government benefits where the system rewards waiting. US Social Security grows about 8% for each year of delay between full retirement age and 70.
And if retirement is still years away, the cheapest fix of all sits on the savings side. Check retirement savings by age to see where you stand, then how much to save each month to close any gap while compounding still works for you instead of against you.
The table gives you the ballpark. Your own numbers give you the real answer. Put your balance and spending into the retirement calculator, find the year the money runs out, then change one assumption and watch how far that date moves.
Frequently asked questions
How long will $500,000 last in retirement?
At a 4% withdrawal rate, $500,000 typically lasts 30 to 35 years, starting at $20,000 of income in the first year. At 5% it lasts roughly 25 years, and at 6% closer to 20, assuming a portfolio earning about 2% above inflation. Strong returns stretch those numbers; early losses shrink them.
What is the 4% rule in retirement?
The 4% rule says you withdraw 4% of your portfolio in the first year of retirement, then adjust that dollar amount for inflation each year afterward. Based on the Trinity study of US market history since 1926, this approach survived nearly every 30-year retirement period. It is a planning guideline, not a guarantee.
Can I retire at 60 with $500k?
Retiring at 60 with $500,000 works if your annual spending stays near $20,000 to $25,000 before any pension or government benefits. The catch is time: a retirement starting at 60 can run 35 years, so a rate below 4% is safer. Part-time income in the first decade helps considerably.
How much monthly income does $500,000 generate in retirement?
At a 4% withdrawal rate, $500,000 generates about $1,667 per month in the first year, rising with inflation afterward. A 5% rate pays about $2,083 monthly and a 6% rate about $2,500, but each step up shortens how long the money lasts, often by five years or more.
What happens if I withdraw 6% instead of 4%?
Withdrawing 6% instead of 4% cuts a portfolio’s lifespan roughly in half under modest returns. At a 2% real return, a nest egg lasts about 35 years at 4% but only around 20 years at 6%. The higher rate also leaves far less room to absorb an early market crash.
How can I make my retirement savings last longer?
The fastest ways to make retirement savings last longer are lowering your withdrawal rate and cutting spending in years the market falls. Working one extra year, keeping investment fees under control, and delaying government benefits all add measurable time. Skipping the inflation raise after a losing year is a simple guardrail.