The 15-Minute Retirement Plan

Will Your Retirement Money Last? 

One of the biggest risks an investor faces is running out of money in retirement. This can be a personal tragedy. People may work their whole lives to accumulate enough wealth for a comfortable retirement only to find they’ve come up short. To help minimize this risk, Fisher Investments recommends keeping the following key questions in mind when planning your retirement.

How Long Will You Need Your Portfolio to Provide for You?

Your lifespan may be significantly longer than you expect. Exhibit 1 shows the Social Security Administration’s life expectancies for Americans currently age 65. We believe these projections likely underestimate how long people will actually live given ongoing medical advancements. Life expectancies vary among spouses and genders, and it is beneficial to plan for the longer of your two life expectancies: your joint life expectancy. No one wants to be impoverished later in life because they didn’t think they would still be alive. If you have a partner, you should both prepare to live a long time and make sure you have enough money to maintain your lifestyle. The bottom line? Your time horizon may be much longer than you realize. 
 

Exhibit 1: If You’re 65 Today, the Probability of Living to a Specific Age¹

How Can Cash Distributions and Inflation Impact Your Portfolio?

As you anticipate your investment time horizon—how long you need your money to last—it’s also critical to understand how withdrawals will impact your portfolio. Like many investors, you may have unrealistic expectations of how much money you’ll be able to safely withdraw each year during retirement. 

Some folks believe it’s safe to withdraw 10% per year without drawing down principal since equities have historically delivered a roughly 10% annualized return.² A common—but incorrect—assumption.

Though equities may annualize about 10% over time, returns vary greatly from year to year. Miscalculating withdrawals during market downturns can substantially decrease the probability of maintaining your principal. For example, if your portfolio is down 20% and you take a 10% distribution, you will need about a 39% gain just to get back to the initial value. 

² Source: Finaeon, as of 5/28/2025. Based on annualized S&P 500 Total Return Index returns from 12/31/1925 – 12/31/2024.

Inflation is another important factor to consider. Inflation is insidious. It decreases purchasing power over time and erodes real savings and investment returns. Many investors fail to realize how much of an impact inflation can have. 

Since 1925, inflation has averaged about 3% per year.³ If that average inflation rate continues in the future, a person who currently requires $50,000 to cover annual living expenses would need slightly less than $90,000 in 20 years and about $120,000 in 30 years just to maintain the same purchasing power. 

Similarly, if you placed $1,000,000 under your mattress today, in 30 years that money would only be worth around $419,118 in today’s dollars.  

³ Source: Finaeon, Inc. as of 2/7/2025. United States Consumer Price Index from 12/31/1925 to 12/31/2024, average annualized inflation was 2.94%.
 

Exhibit 2: Maintaining Purchasing Power⁴

Even during years of low inflation, prices for all goods do not necessarily remain static. For example, clothing prices have fallen slightly, but prices for hospital services have skyrocketed over 554% since 1989.⁵ Consequently, retirees may need to rely on higher-returning investments over time to pay for these services. 

⁵ Source: FactSet, as of 5/28/2025, US Bureau of Labor Statistics’ Consumer Price Components, 12/31/1989 to 12/31/2024, seasonally adjusted.

Exhibit 3: Price Changes in Vital Expense Goods Categories, December 1989 – December 2024⁶

Some categories, such as healthcare, that make up a greater portion of retirees’ budgets have experienced higher levels of inflation over the years than the overall measurement. Exhibits 3 and 4 show healthcare costs, along with other important products and services, have historically outpaced the growing costs of many other goods while also increasing as a portion of income as people age. In our view, this increases the need for many investors to have exposure to growth-oriented investments over longer time periods.
 

Exhibit 4: Expenses as a Percent of Net Income, Based on Age⁷