A Spending Target

How much can you spend and still make your nest egg last?


After you've amassed a nest egg, you need to develop a plan for sustaining it. But workers aren't sure how much they can spend in a given year and still make their savings last a lifetime. A recent MetLife Mature Market Institute and GfK North America survey found that 43 percent of workers between the ages of 56 and 65 who plan to retire in the next five years say they can withdraw 10 percent or more of their savings each year while still preserving their principal. But most retirement experts suggest a withdrawal rate of 4 percent or less annually. Here's how long MetLife calculated your savings will last for a given withdrawal rate.

Annual Percent Withdrawn How Long Your Savings Will Last
4 percent 30 years
7 percent 14 years
10 percent 9 years
15 percent 6 years

Note: Number of years a hypothetical portfolio with a
moderate asset allocation of 50 percent stocks
and 50 percent bonds will last with 90 percent
confidence after accounting for inflation and fund
expenses and assuming historic average investment
returns. Taxes were not factored into the calculation.

Source: MetLife Mature Market Institute, 2008

But, of course, you also have to take into consideration Social Security benefits, pension plans, investment returns, and taxes when deciding how much to withdraw in a given year.