Retirement planning is a complex topic, with questions to be answered at every step of the way. Which type of plan should I choose? What mix of investments is best for me to meet my goals? How much of my income should I be saving? Yet as your nest egg grows, there’s one question that needs to be revisited again and again…How long will my money last once I retire?

Most of us want to live as long as possible, but no one likes to imagine an old age where we’ve run out of money. Being a bit short on cash when you’re younger is one thing—you can always work a little more. But if your well runs dry once you’re deep into your retirement years, it won’t be so easy. That’s why it’s critical to have the clearest, most realistic projection of your financial situation so you can make any necessary adjustments while the future is still in the future.

An inexact science

There are tools to help you estimate how far your money will go, but let’s be frank about the fact that none of us can see ahead in time. You can base your projections on the world as it exists now, and you can incorporate decades of economic history into your modeling, and yet Black Swan events such as the Covid-19 pandemic do come along and throw a wrench into things. So, while it remains important to be thoughtful about the future and to try to see it as plainly as possible, some part of you should always remain open to the idea that things could look very different when your retirement finally arrives.

The calculus

What goes into your calculation about how far your retirement savings will go? There might be more to the question than seems immediately obvious. All of these can have an effect:

How much money is in your retirement account…This is undoubtedly the most obvious factor. The more money you have socked away, the longer you should be able to make it last.

Your rate of return…What kind of yield are you getting on the investments in your portfolio? Is that yield likely to remain steady, or might it change with fluctuations in the economy? Is the mix of assets in your portfolio optimized for someone at your stage of retirement planning or retirement?

What other sources of income and wealth you have…At what point will you begin taking Social Security? Do you have annuities, real estate investments, or other sources of income?

Your retirement date…Another obvious one. The more years you spend working, the fewer you’ll spend retired and the more time you’ll have to add to your retirement nest egg.

Your lifestyle…How do you plan to live during retirement? Do you expect to have a luxury car and fancy house, to do a lot of traveling, to pay for your grandchildren’s college, to keep two homes? Or will you age in your home that will be paid off, merely paying for upkeep and taxes? Making an honest assessment of how you plan to live will help you understand how long your money will last.

Your health and independence…Do you anticipate having a lot of health problems? Will you need to pay caregivers? Will you always have a lot of medical expenses? Will you need to live in a group setting?

Future cost of living… How much will a one-bedroom apartment cost 20 years from now? What will the typical car payment be in 2045? It’s impossible to foresee the rate of Inflation years and decades in advance, but financial modeling can help you make some educated guesses.

Retirement savings calculators

You could, of course, do a lot of research, a lot of assessment of your financial affairs and priorities, and a lot of math to come up with an estimate of how long your money will last using the above parameters. You’d get an even more accurate projection if you were to work closely with a retirement planning advisor whose job it is to help people like you understand what their retirements could and should look like.

But you can also get a rough idea of how long your funds will last by using one (or more) of the many free retirement savings calculators that are available online. Use a calculator from a reputable source such as AARP, Bankrate, or SmartAsset. Don’t look at just one, though. Explore several of them, since they each make different assumptions about the future and consider various parameters. Go ahead and play around with these calculators to zero in on a good sense of how far your money will go under various scenarios. What if you retired a bit later? What if you held off on collecting Social Security until age 70? What if you started saving an extra $50 each month?

Some calculators will tell you outright, “Your retirement savings will run out at age 82,” for example. Take such declarations with a grain of salt, understanding that the algorithms are relying on assumptions about the future that could be way off.  You might be biased toward tools that try to get as granular as possible about things like how healthy you are, how much you plan to travel during retirement, where you plan to live, and so on. But that level of detail can either be a boon or a bane when it comes to predicting the future. The more such detail you enter, the more accurate the picture will be…if and only if all of those details are borne out by reality.

If the opposite turns out to be true, then relying on a great number of detailed parameters is to invite error. What if you aren’t as healthy as you’d hoped? What if you develop the travel bug late in life? What if you can’t work for as long as you’d hoped? What if your investments don’t perform as well as you’d thought they would? Your calculations could be thrown off drastically by bad data. That’s why there’s a place for more blunt instruments that just ask for a few basic parameters and that base their assumptions on the average person of your general circumstances. Ideally, you’ll fiddle with both types of calculator to arrive at a reasonable range of outcomes.

By entering the same information into several different calculators and seeing just how far off the results can be from each other, you’ll gain an appreciation for just how inexact such calculations are. On the other hand, you should gain a strong directional sense of whether you’re on track to thrive during retirement and, if so, for how long.

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