Will My Retirement Money Last? Understanding the Odds
Why a fixed 4% rule is only a starting point, what sequence-of-returns risk is, and how simulations show the chance of success.
Average returns hide a big risk: the order they come in. A crash in the first years of retirement hurts far more than the same crash later, because you are selling while prices are low.
The 4% rule and its limits
The 4% rule says withdraw 4% of your starting pot, then raise that amount with inflation. It came from past US data and worked for 30 years in most periods, but not all.
Simulate thousands of futures
The Monte Carlo retirement calculator tests your plan against 2,000 random market paths. In the default example (4% withdrawal, 30 years) the money lasts in about 77% of futures. Lowering the withdrawal or working a few years longer raises that sharply.
Levers that help
- Spend a little less in bad years.
- Delay retirement by one or two years.
- Keep some flexibility, such as part-time income.
Next steps
Find your target with the FIRE number calculator, see how soon you could stop with the early retirement age calculator, or check coast FIRE.
This article is general education, not financial advice.