make your money last

With life expectancy on the rise, more and more people are asking themselves: Will I outlive my assets? How long will my nest egg last?

History buffs may be interested to know that when FDR proposed the Social Security Plan in 1935, the average life expectancy for men was 58, and 62 for women. Today it’s 76 and 81. And Gen Yers may expect to live until the age of 100! This means it is more important than ever to grow that nest egg while you can and plan for when and how you will draw it down.

Let’s review some simple steps to clarify how much you will need:


At what age would you like to retire? Do you plan on downsizing to either free up equity in your home or lower your rental costs? Do you wish to leave money to heirs or to charity? Will you work part time? Do you hope to travel? These are important questions to consider because your answers will dictate your estimated income requirements in retirement. You may not have concrete answers to all these questions, but you can still move on to Step 2.


Once you have thought about what retirement may look like for you, try to gauge what it will cost. Take pencil to paper and list your expected expenses. If you expect to downsize, then perhaps you will no longer have a mortgage. If your plans include more
travel, then add extra dollars in for that. Your health care costs may increase as you come off a company plan and move on to Medicare. Dental expenses also typically increase significantly with age. Try to identify as many variables as you can.


The traditional rule of thumb, created decades ago by financial planner Bill Bengen, is known as the “4 percent rule.” Bengen found that retirees who withdrew 4 percent of their initial retirement portfolio balance, and then adjusted that dollar amount for inflation each year thereafter, would create an income stream that lasts for 30 years. Despite recent debates over the “4% rule” being either too high or too low, it is generally regarded as a good starting point. An Investment or Financial Advisor can help you navigate this. You can also try googling a retirement planning calculator online.


This is the million dollar question- no pun intended! The way to calculate how much you need to save for retirement is to work backward. Adhering to the 4% withdrawal rate described in Step 3, calculate anticipated annual expenses, subtract Social Security and
other sources of income, and multiply the remaining number by 25. For example, with projected expenses of $65,000, less an estimated annual Social Security benefit of $20,000, a retiree would need to have saved $1.125 mil ($45,000 x 25). This exercise is pre-tax; remember to factor in taxes to be paid on income.


Before retirement: The real key is to save as much money as possible prior to retiring, maximizing the use of retirement accounts, 401ks, IRAs, etc. Nearing retirement: Work with a Financial Advisor to explore whether you have enough money to retire. Create a plan for annual withdrawals, as well as an investment allocation between stocks and bonds that meets your risk profile along with income and growth needs.

During retirement:

Evaluate annually to insure that your investment allocations, returns and withdrawal rates are on target. If you are concerned that you are exceeding your allotted withdrawals, consider drawing less in a given year; then in a year of stronger
investment results, resume the original withdrawal level.


Gail Wiesenfeld

Gail Wiesenfeld, CFA is an Investment Advisor with Nardis Advisors LLC in Larchmont, NY. She has an MBA in Finance and is a Chartered Financial Analyst. She can be reached at

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