Personal Finance

3 Reasons Baby Boomers Might Be Shocked How Long Their Retirement Account Last Them

Maurie Backman

Published: February 27, 2025 9:54 am

A recent Allianz survey found that Americans are more worried about running out of money in retirement than dying. And that’s an understandable concern.

Whether you retire with $500,000 or $5 million, if you’re not careful, you could reach a point where your nest egg is whittled down to nothing. But here are a few reasons why your retirement savings might actually last longer than you’d think.

1. You might get more than expected from Social Security

The average Social Security recipient today collects $1,976 per month. But if you were an above-average earner, you may be in line for a larger monthly Social Security check.

Also, your filing age helps determine what Social Security benefit you receive. If you delay your filing beyond full retirement age, your monthly benefit gets boosted for life.

You should also know that Social Security benefits are eligible for a yearly cost-of-living adjustment. This is designed to help ensure that benefits are able to keep pace with inflation.

So all told, you may be surprised — in a good way — at how much retirement income you get out of those benefits. And if it’s more than you were banking on, it means you may not have to take as much money out of your savings as you would’ve thought.

2. Your expenses might decline substantially

A lot of the bills you faced during your working years might stick around in retirement. But you might also have the option to live more frugally.

Once you’re retired, you don’t have to pay to commute. But that could also mean that you no longer need a car if you live in a walkable area or have plenty of public transportation options that are cheaper. That could result in huge savings when you account for not having a car payment or auto insurance to worry about.

Also, your housing costs might drop in retirement. A lot of people manage to pay off their mortgages ahead of retirement. And if you no longer need access to a job, you may have the option to move to a new city with lower living costs on a whole.

Plus, once you stop working, you’re apt to have more time to do things like cook and maintain your home. These are services you may have been forced to pay for when your job kept you very busy.

3. You can stretch your savings by being careful with withdrawals

Another reason your retirement account might hold up better than expected is that you’re managing it well. For years, financial experts recommended the 4% rule for retirement plan withdrawals. But savvy retirees may be aware that a 4% withdrawal rate is a bit too aggressive in today’s economic environment.

If you’re only tapping your savings to the tune of 2.5% or 3% each year, then there’s a good chance your nest egg is going to have plenty of staying power. And even a 3.5% withdrawal rate could stretch your savings nicely.

If you’re not sure how much to withdraw from your nest egg each year, consult a financial advisor for guidance. They can take your expenses, other income sources, and life expectancy into account to help you come up with a withdrawal rate that helps your retirement account last as long as you need it to.