How Long Will My Money Last Calculator Fidelity Retirement

Retirement planning is a critical financial decision. One of the most important questions to answer is: "How long will my money last?" This calculator uses Fidelity's approach to estimate how long your retirement savings will support your desired lifestyle.

How the Calculator Works

The calculator estimates how long your retirement savings will last by considering your current balance, expected annual withdrawals, and the rate of return you expect on your investments. It uses a simplified version of the "Money Duration" concept popularized by Fidelity Investments.

This calculator provides an estimate based on your inputs. Actual results may vary depending on market conditions, investment performance, and other factors beyond your control.

Key Inputs

Current Savings: Your total retirement account balance
Annual Withdrawal: The amount you plan to withdraw each year
Expected Annual Return: The rate of return you expect on your investments

Assumptions

The calculation assumes:

Withdrawals are made at the beginning of each year
Investments earn compound interest
No additional contributions are made after retirement
Withdrawals remain constant throughout retirement

The Formula

The calculator uses this formula to estimate money duration:

Money Duration (Years) =

ln(Current Savings / Annual Withdrawal) / ln(1 + Expected Annual Return)

Where:

ln is the natural logarithm function
Current Savings is your total retirement balance
Annual Withdrawal is your planned yearly withdrawal
Expected Annual Return is your expected investment return

This formula assumes withdrawals are made at the beginning of each year and that investments earn compound interest.

Worked Example

Let's say you have $500,000 in retirement savings, plan to withdraw $40,000 per year, and expect a 4% annual return on your investments.

Money Duration =

ln(500,000 / 40,000) / ln(1 + 0.04)

= ln(12.5) / ln(1.04)

≈ 2.527 / 0.0392

≈ 64.46 years

This means your $500,000 could potentially last about 64 years if you withdraw $40,000 annually with a 4% annual return.

Remember, this is an estimate. Actual results may vary based on market conditions and other factors.

Interpreting Results

The calculator provides an estimate of how long your money might last. Here's what the results mean:

Short Duration (Under 20 Years)

Your current savings and withdrawal rate suggest your money may run out relatively quickly. You may need to:

Increase your savings
Reduce your withdrawal amount
Adjust your expected return assumptions

Medium Duration (20-30 Years)

Your money could potentially last for a moderate period. Consider:

Regularly reviewing your financial plan
Adjusting your withdrawal strategy as needed
Ensuring your investments align with your time horizon

Long Duration (Over 30 Years)

Your current savings and withdrawal rate suggest your money could last for many years. Consider:

Potential tax implications of withdrawals
Healthcare costs in retirement
Inflation adjustments to your withdrawal amount

These are general guidelines. Always consult with a financial advisor for personalized advice.

Frequently Asked Questions

How accurate is this calculator?: The calculator provides an estimate based on your inputs and standard financial assumptions. Actual results may vary due to market conditions, investment performance, and other factors.
Does this calculator account for inflation?: No, this calculator does not adjust for inflation. For a more complete picture, consider using an inflation-adjusted withdrawal calculator.
What if I want to adjust my withdrawal amount?: You can use the calculator multiple times with different withdrawal amounts to see how it affects your money duration.
Should I use this calculator instead of a financial advisor?: This calculator provides a starting point for your retirement planning. For personalized advice, consult with a certified financial planner.
How often should I review my retirement plan?: At minimum, review your plan annually or whenever significant life changes occur (marriage, divorce, birth of a child, etc.).