I’m Retiring With $300,000. Will It Last 25 Years?

According to the Federal Reserve Survey of Consumer Finances (SCF), the median retirement savings amount for households ages 65 to 74 is around $200,000. If you have $300,000 saved, you’re doing better than the typical American.

But you still don’t have millions. So, if you’re worried about having enough to live on, those fears aren’t necessarily unfounded. 

The big question you’re probably facing at this point is whether your $300K can last. And the answer to that is going to depend on a few different factors — most notably, what your withdrawal rate is. 

Can a $300,000 retirement nest egg last?

You can make any size retirement nest egg last if you are conservative about making withdrawals from it. The key is not to take out so much money that you drain the account and have too little invested to continue earning returns. 

The 4% rule is one of the most common rules for setting a safe withdrawal rate. If you follow it, you take 4% out of your investment accounts the first year and adjust each year for inflation. This gives you around a 90% chance of your money lasting for at least a 30-year retirement. There have been some revisions upward by the creator of the 4% rule, and downward by Morningstar, but many retirees still just follow the basic rule. 

Assuming you do, you could withdraw $12,000 per year from your retirement savings of $300K, and have a fairly solid chance of your money lasting.

Of course, you need to be able to live on that amount. If you’re collecting around the average Social Security benefit, which is a bit above $2,000 per month, you’d be looking at an annual income of $36,000. While that’s not a fortune, it may be enough for you, depending on what you were earning before leaving work, if your spouse has income, the cost of living in your area, and whether you have housing expenses or live in a paid-off home. 

Biggest risks to making a $300K nest egg last

While you can most likely make a $300K nest egg last if you’re conservative in your withdrawals, you do face some variables that may make that harder. 

The sequence-of-returns risk is the big one. Essentially, if you suffer losses early in retirement and are forced to lock in those losses by selling stock to support yourself, there’s a much bigger risk your balance will fall to a dangerously low level. This could mean your account will either produce very little income or will run out entirely. Since a $300K balance doesn’t leave you a lot of extra wiggle room, this is a bigger threat than it would be for someone with a larger portfolio. 

You may also not be able to limit withdrawals to just $12,000, especially if you have significant healthcare expenses or need long-term care and don’t have a plan for covering either. If you begin making larger withdrawals from your account, you could run out of money quickly. 

What are your options for a more comfortable retirement?

When you’re staring down an impending retirement in a few months or a few years with just $300K saved, you have a couple of choices. 

• You could drastically lower your cost of living: This could mean downsizing or moving to a cheaper place. 
• You could continue working and saving for longer: This helps you increase your savings and reduce the number of years you need to rely on it.
• You could delay your Social Security benefit claim. Delaying increases your average benefit for each month you wait until 70. If you have a full retirement age of 67 and were on track for a $2,000 monthly benefit at your FRA, claiming it at 62 would shrink it to $1,400, and claiming it at 70 would increase it to $2,480. The bigger benefit gives you some more breathing room, although delaying would likely mean waiting to retire until 70, since a $300K nest egg alone probably couldn’t support you. 

A financial advisor can help you consider which of these options is most likely to work for you to have the retirement you deserve.