How long will $500k last in retirement?
Spending $20,000 a year, 4% of the starting balance, $500k outlasts a plan to age 95, with about $537,798 left after tax, in future dollars. At $25,000 a year it runs short at age 94, and at $30,000 it runs short at age 85. That is for one person retiring at 65, spending more each year with inflation, with every dollar drawn from a traditional 401(k) and taxed on the way out.
The spending figure is what you live on, in today's money, and it is not what comes out of the account. The first retired year is a year from now, so $25,000 has grown to $25,750 with inflation, and to pay it this household withdraws about $30,725: that spending plus about $4,975 of federal and state tax, because money leaving a 401(k) is taxed as income. A calculator that divides the balance by the spending leaves that out.
The tax rate on those withdrawals rises with their size, so the same percentage costs a larger portfolio more. Spending 5% of a bigger pre-tax balance pushes more of each withdrawal into higher brackets, and the money runs short sooner than 5% of a smaller one. That is why this page gives ages for $500k specifically rather than a rule that claims to fit every balance.
On this projection the highest withdrawal rate that reaches 95 is 4%, spending $20,000 a year. At $40,000 a year it runs short at age 78, 13 years in.
This is the portfolio on its own. There is no Social Security, pension or other income here, so if a benefit covers part of your spending, the portfolio only has to fund the rest and lasts longer: use the row for the amount the portfolio itself must cover. Healthcare and every other cost sit inside the spending figure. From 73 the required minimum distributions can take out more than you spend, and the tax on that is inside these figures too.
One limit worth knowing. The projection earns the same return every year, so it does not show what an early run of bad markets does to a portfolio that is being drawn down. That risk, sequence of returns, can pull every age on this page earlier, and it is the reason to treat the higher rows with caution.
Spending a year vs outcome
The same question at every spending a year, so you can use the one you believe.
| Spending a year | How long it lasts |
|---|---|
| $15,000 (3%) | Past 95, $1,250,183 left after tax |
| $20,000 (4%)the 4% rule | Past 95, $537,798 left after tax |
| $25,000 (5%) | To age 94 (29 years) |
| $30,000 (6%) | To age 85 (20 years) |
| $35,000 (7%) | To age 81 (16 years) |
| $40,000 (8%) | To age 78 (13 years) |
| $50,000 (10%) | To age 74 (9 years) |
Spending is in today's dollars and rises with inflation every year. The withdrawal behind it is larger, because the tax on each withdrawal comes out of the same account. Returns are 7% a year and inflation 3%, every year, with no bad run of markets.
Assumptions
- Portfolio
- 500000
- Retire Age
- 65
- Plan To Age
- 95
- Headline Withdrawal Rate
- 4%
- Investment Return
- 0.07
- Inflation
- 0.03
Frequently asked
How long will $500k last in retirement?
It depends on what you spend. At $20,000 a year it outlasts a plan to age 95; at $25,000 it runs short at age 94; at $40,000 it runs short at age 78.
How much can I spend a year from $500k?
About $20,000 a year reaches age 95 on this projection, which is 4% of the starting balance, rising with inflation.
Does Social Security change this?
Yes. This page is the portfolio on its own. Social Security pays alongside it, so the portfolio only funds the spending the benefit does not cover, and lasts longer. Use the row for that amount.
Why do taxes matter so much here?
Every dollar from a traditional 401(k) is taxed as income. Spending $25,000 in today's money takes a withdrawal of about $30,725 in the first year. Money in a Roth, or the cost basis in a taxable account, is not taxed on the way out, so it goes further.
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