Outliving your savings is a top retirement fear. Here is what actually determines how long your money lasts.
Withdrawal rate is the biggest factor
How long your savings last depends most on how much you withdraw each year. The 4% rule, drawing 4% in year one then adjusting for inflation, is designed to last roughly 30 years based on historical data. Withdraw 5-6% and you risk depleting funds in 20 years or less, especially in a weak market. Withdraw 3% and your money may last 40+ years. Your sustainable rate depends on your portfolio mix, retirement length, and willingness to adjust spending in down years. Flexible retirees who cut withdrawals during downturns dramatically improve their odds of not running out.
Why timing of returns matters
Two retirees with identical balances and withdrawal rates can have very different outcomes if one retires just before a market crash. This is sequence-of-returns risk: early losses combined with withdrawals shrink the base that needs to recover. A 30% drop in your first retirement years is far more damaging than the same drop a decade later. Holding one to three years of spending in cash or bonds, so you can avoid selling stocks in a downturn, is a common defense that helps your savings last longer.
Healthcare costs can shorten the timeline
Unexpected medical bills are a leading reason savings run short. Original Medicare leaves gaps, including 20% Part B coinsurance with no out-of-pocket cap, exposing retirees to large, unpredictable costs. A Medigap plan converts those variable costs into a predictable premium, protecting your withdrawal plan. Call 1-800-MEDIGAP at 1-800-633-4427 to see how supplemental coverage can help your savings last.