Understanding how long your money will last
Updated
What it’s for
It answers a question that keeps a lot of people up at night: “how long will my money last?”. It’s useful if you’re retiring, taking a sabbatical, or just received an inheritance or a settlement and want to know how far it goes.
Picture a water tank with one faucet filling it and another draining it. The one filling it is interest. The one draining it is your withdrawal. If less goes out than comes in, the level rises. If more goes out, it drops, and it drops faster over time, because with less water in the tank the interest faucet gets weaker too.
An example with real numbers
With $500,000 earning 0.5% a month, interest pays $2,500 a month.
| Monthly withdrawal | What happens |
|---|---|
| $2,500 | The balance stays at the same level, forever |
| $3,000 | The money lasts about 30 years |
| $3,500 | The money lasts about 21 years |
Notice how $1,000 more a month turns “forever” into about two decades. The withdrawal is the number you control, and it matters much more than it seems.
How much can I withdraw without running out
The math is simple: multiply your savings by the monthly rate. With $500,000 at 0.5%, that’s $2,500. That’s the ceiling for the balance not to shrink. But it doesn’t account for inflation: ten years from now, the same $2,500 will buy a lot less. To keep your buying power, withdraw a bit less and leave the rest growing, as the live off your investments calculator shows.
What the math doesn’t show
Withdrawing from your own savings feels different from getting a paycheck. Many people who saved their whole life feel guilty with every withdrawal, even when the numbers work. Others do the opposite and raise the withdrawal “just this month” over and over.
Having the simulation in hand helps either way. It swaps the feeling for a number and makes clear how much room you really have.
Frequently asked questions
What if I’m still contributing? Turn on advanced mode. Each contribution tops up the tank and can turn a balance that would shrink into one that holds steady.
Does it include taxes? No. Use a rate that already accounts for taxes on your investment for a more realistic picture.
What if returns drop along the way? The simulation uses a fixed rate. It’s worth testing a pessimistic scenario with a lower rate to see if your plan holds up.
What’s the longest period? You can simulate decades. For retirement, people often test 25 to 35 years.
Next step: want to know how much you’d need to never run out? Try the live off your investments calculator.
