Will My Retirement Savings Last Throughout Retirement?

Why the amount you withdraw matters

Suppose a household has $1 million saved and needs $40,000 from retirement accounts in the first year. That is a 4% starting withdrawal relative to savings, before taxes. Withdrawals may rise as prices rise, and a large surprise expense could put more pressure on savings. No single withdrawal rate can promise that money will last. This is a general illustration, separate from Mary’s projection.

A retirement example: Mary Johnson

Mary is 65 and plans to retire at 67. She has $1 million in retirement savings, expects $36,000 a year from Social Security starting at 67, and plans to spend $75,000 a year in today’s dollars. She wants her plan to last through age 90. See Social Security’s explanation of how claiming age affects benefits.

SageonRQ compared Mary’s Current Plan with a Modeled Plan that includes Roth conversions. Both plans are projected to support her retirement through age 90 under the assumptions used. The main difference is how much she may pay in taxes and how her money is held at the end.

What SageonRQ found

In this example, the Modeled Plan projects $83,915 less in lifetime taxes and $248,395 less in required minimum distributions (RMDs). RMDs are required withdrawals, not tax bills, so the RMD reduction is not the same amount in tax savings. Ending Roth savings are $1,044,845 higher. The Modeled Plan’s ending value after taxes is $8,737 lower than the Current Plan. Both plans still reach age 90 in this projection. The larger Roth balance comes with a small reduction in total after-tax ending value.

Why does a larger Roth balance matter?

Under current tax rules, qualified Roth withdrawals generally do not add to federal taxable income. That may give Mary more choice about where to take money when she needs it. A larger Roth balance may also help heirs, depending on their situation and the rules that apply when they inherit the account. Roth conversions can create taxes in the years they are made, so the timing matters. The full comparison also reflects other choices in the plan, not Roth conversions alone. Read IRS guidance on Roth IRA distributions and conversions. See the Roth conversion case study.

What if life does not go as planned?

Even a plan that reaches age 90 in a projection can face surprises. A major home repair, higher inflation, a market drop early in retirement, changes in tax rules, or living longer than expected can change the result. Mary’s Audit did not separately test each of these events. They are reasons to revisit the plan and compare other assumptions.

What should Mary do next?

Mary now knows that both plans are projected to last through her planning age, but one may reduce taxes and future required withdrawals. Her next step is to look at the details, check the assumptions, and decide which tradeoffs fit her goals. SageonRQ’s Retirement Opportunity Audit helps spot these differences. Retirement Strategy Navigator is planned to provide deeper, year-by-year comparisons and ways to test changes to a plan.

Questions retirees often ask

Is $1 million enough to retire?

It depends on your spending, income, taxes, age, and how long retirement lasts.

Is a 4% or 5% withdrawal rate safe?

A starting percentage is a guide, not a guarantee. Your full plan matters.

What if inflation is higher than expected?

Your bills may grow faster than planned. Reviewing different inflation assumptions can help you see the risk.

Can Roth conversions help my plan?

They may reduce future taxes or RMDs, but they can also increase taxes now. Compare both sides.

What if I live past age 90?

You may need more years of income. Your planning horizon should reflect your needs and goals.