How long will $500,000 last using the 4% rule?

How Long Will $500,000 Last in Retirement?

It’s a common question: if you retire with $500,000 saved, how long will it last? The answer isn’t one-size-fits-all, but financial planners often turn to the 4% rule as a starting point. This guideline suggests you can withdraw 4% of your savings in the first year of retirement—$20,000 in this case—and adjust that amount for inflation each year without running out of money for roughly 30 years.

That timeline assumes a balanced investment strategy and average market returns. In reality, how long your money lasts depends on a few key factors: your spending habits, investment performance, healthcare costs, and whether you have other income sources like Social Security or a pension.

For some, $20,000 a year might cover basic expenses, especially in areas with a low cost of living. But for others—especially those used to a higher standard of living or facing unexpected medical bills—it may fall short. Inflation also plays a quiet but powerful role; over two or three decades, the cost of living can rise significantly, eroding purchasing power.

Another consideration is when you retire. If you're leaving the workforce at 60 versus 65, those extra five years of withdrawals can make a big difference. Equally important is how you invest: too conservative, and your returns may not keep up with inflation; too risky, and a market downturn could dent your balance early in retirement.

The 4% rule isn’t perfect, and some experts now argue it’s too generous given today’s economic climate. But as a rough benchmark, it shows that with $500,000, thoughtful planning, and disciplined spending, your savings could stretch 20 to 30 years. Ultimately, your retirement success hinges not just on the number in your account, but on how wisely you manage it.