How long will $1 million last in retirement?
Withdrawing $3,333 a month (4% of $1,000,000 in the first year), raised 2.5% a year, with a constant 5% annual return, the money lasts 39.8 years. At 5% of the portfolio ($4,167 a month) it lasts 28.0 years.
The 4% rule gives $3,333 a month from $1 million. At a 5% return that rising withdrawal lasts 39.8 years; a flat $5,368 a month, or a rising $3,971, would empty it in exactly 30 years.
Returns are constant assumptions, not forecasts. Withdrawals are before tax. Change any input in the calculator.
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How long it lasts by monthly withdrawal
Years until $1,000,000 runs out, with the first withdrawal rising 2.5% a year after that. Read across for the return, down for the spending.
| First withdrawal | 3% return | 4% return | 5% return | 6% return | 7% return |
|---|---|---|---|---|---|
| $3,000 a month3.6% of the portfolio a year | 30.2 years | 36.3 years | 48.1 years | 50+ years | 50+ years |
| $4,000 a month4.8% of the portfolio a year | 22.2 years | 25.2 years | 29.8 years | 37.8 years | 50+ years |
| $5,000 a month6% of the portfolio a year | 17.5 years | 19.3 years | 21.8 years | 25.3 years | 31.2 years |
| $6,000 a month7.2% of the portfolio a year | 14.5 years | 15.7 years | 17.2 years | 19.2 years | 22.0 years |
| $8,000 a month9.6% of the portfolio a year | 10.8 years | 11.4 years | 12.2 years | 13.1 years | 14.2 years |
| $10,000 a month12% of the portfolio a year | 8.6 years | 9.0 years | 9.4 years | 9.9 years | 10.6 years |
Each month the balance earns the annual return divided by 12, then the withdrawal is taken. "Rising" withdrawals grow 2.5% a year to keep pace with an assumed inflation rate; "flat" withdrawals stay the same dollar amount. Runways longer than 50 years are shown as 50+.
Income at 3%, 4% and 5% withdrawal rates
| Initial rate | Per year | Per month | Lasts |
|---|---|---|---|
| 3% | $30,000 | $2,500 | 50+ years |
| 4% | $40,000 | $3,333 | 39.8 years |
| 5% | $50,000 | $4,167 | 28.0 years |
A withdrawal rate is the first year's withdrawal divided by the starting balance. The runway for a given rate is the same at any portfolio size; the dollar income is what changes.
Flat or inflation-adjusted withdrawals
Keeping the withdrawal flat stretches the money but lets inflation erode what it buys; raising it 2.5% a year keeps spending power and shortens the runway.
| First withdrawal | Flat | Rising 2.5% a year |
|---|---|---|
| $3,000 a month | 50+ years | 48.1 years |
| $4,000 a month | 50+ years | 29.8 years |
| $5,000 a month | 35.9 years | 21.8 years |
| $6,000 a month | 23.8 years | 17.2 years |
| $8,000 a month | 14.8 years | 12.2 years |
| $10,000 a month | 10.8 years | 9.4 years |
Withdrawal that lasts exactly 30 years
| Return | Rising 2.5% a year | Flat |
|---|---|---|
| 3% | $3,010 | $4,216 |
| 4% | $3,470 | $4,774 |
| 5% | $3,971 | $5,368 |
| 6% | $4,511 | $5,996 |
| 7% | $5,089 | $6,653 |
These spend the whole balance by the end of year 30 and leave nothing for a longer life or a bad early market.
Where the 4% rule comes from
The "4% rule" comes from William Bengen's October 1994 article in the Journal of Financial Planning. Using historical US stock and bond returns and inflation, he concluded that a first-year withdrawal of 4% of the portfolio, raised for inflation each year after, should be safe for at least 30 years. It describes past US market history, not a guarantee. In this constant-return model, $3,333 a month rising 2.5% a year lasts 26.9 years at a 3% return, 39.8 years at 5% and 50+ years at 7%. Bengen's result came from actual year-by-year returns, including poor early years, which a constant return cannot show.
Assumptions
- Returns are constant, so sequence-of-returns risk (poor returns early in retirement) is not modeled; real portfolios with the same average return can run out sooner. Taxes on withdrawals, investment fees, Social Security, pensions and required minimum distributions are also excluded. Withdrawals here are amounts taken from the portfolio, before tax.
- Returns from 3% to 7% are an illustrative spread, not expected returns for any portfolio.
- Figures are rounded to whole dollars and one decimal of a year.
Questions
How long will $1 million last in retirement?
At a 5% return with withdrawals rising 2.5% a year: 29.8 years at $4,000 a month, 21.8 years at $5,000, 17.2 years at $6,000 and 12.2 years at $8,000.
How much income will $1 million generate?
At the 4% rule, $40,000 in the first year ($3,333 a month), before tax. To empty the portfolio in exactly 30 years at a 5% return, the first withdrawal could be $3,971 a month rising 2.5% a year, or $5,368 flat.
How long does $1 million last at $10,000 a month?
9.4 years at a 5% return with 2.5% yearly increases, and 10.6 years at 7%. That withdrawal is 12% of the starting balance in the first year.
What is the 4% rule?
A first-year withdrawal of 4% of the portfolio, raised for inflation each year. It comes from William Bengen's 1994 study of historical US stock and bond returns, which found it should last at least 30 years. For $1 million that is $40,000 in year one.
Sources
- Bengen (1994), Determining Withdrawal Rates Using Historical Data, Journal of Financial Planning
- Investor.gov: is my money going to run out in retirement?
- Investor.gov: how fees and expenses affect your investment portfolio
These references explain the concepts behind the calculation. They do not endorse this site. Estimates leave out any cost or condition you did not enter.