How Do I Make My Money Last?

Marshall Rathmell |


I often times get asked the question “How do I make my money last for the rest of my life, especially if I live a long life”? This is a critical, personalized question, and especially crucial for women. Women generally live longer than men, so if a family runs out of money, it impacts the women most. 

Here are some factors that should be reviewed in order to successfully allow your money to last:

How long do I need to plan for my money to last?

Of course this is the million dollar question.If we knew how long we will live, we could much more easily figure out the amount needed. Since we do not have a crystal ball, family longevity and probabilities are the best ways to accurately project how many years we are likely to live beyond our earning years. The average life expectancy at age 65 is 18 years for men and over 20 years for women. This is just average – 50% live longer, thank goodness! Demographers say there is a great grandparent boom already. Over 70% of elementary school aged children have at least one great-grandparent living.

How much do I currently have and how much should I be saving?

Take the following inventories:

  1. My total assets I have earmarked for retirement
  2. My income when I quit working, such as social security, pension, annuity, etc.

Everyone has a different situation so the optimal combination of how to invest your assets and how to take prudent withdrawals to maximize your income for all your years of retirement varies. By taking a realistic look at 3 things:

  1.  your estimated years in retirement
  2. your current assets saved for retirement and
  3. your projected spending in retirement

An advisor can help determine the gap between what you currently have and what you need.

What are my expenses and can they be reduced in any way?

Most retirement spending is projected from your pre-retirement spending, so one way to make your money last is to spend less while you are working and save more for retirement. If you are trying to reduce expenses or would like to monitor what you spend, consider opening a free account on Mint. This will help show you what you spend your money on. The results are often surprising!

Think of a bathtub. Once you retire, it is similar to a full bath tub and you have turned off the faucet that supplies the water. The money you have built up over the years has topped off like this tub of water. When you spend the money you have saved, it’s like opening the drain; the water level goes down. If you drain too much too quickly, you will have years left after your bathtub is dry! 

Have the conversation with your advisor to help formulate a plan that provides for your peace of mind to allocate your money going forward to avoid outlasting your money. 

This requires 2 important pieces:

  1. Knowledge of what to do
  2. The discipline to do it

-Sandra Cleveland-