I just retired at age 61 and left my $145,000 salary – how much can I pull from my nest egg every year without the fear of running out of money?
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Running out of money in retirement is one of the biggest fears of soon-to-be retirees, and for a reason. Definitely one of the worst wake up calls you could ever receive. Having to return to work after enjoying the first few years is not only painful, but may also mean difficulty earning the same salary as before leaving the workforce. There is also no guarantee that a person will be able to do his job effectively in his golden years.
In fact, the fear of your retirement nest egg drying up is shared by high net worth individuals who have more than enough and have everything going for them. Of course, disasters can occur (think medical emergencies or violent stock market meltdowns) and can cause seemingly solid retirement plans to be canceled.
So retirees who are skeptical about the sustainability of their nest egg should proceed with caution and have a registered financial planner take a second look at everything. While being overly conservative with your retirement investments will limit growth, the important thing is that you have enough cushion to cushion the fall if your imagined disaster scenario actually comes to fruition.
At the end of the day, retirees should not overextend themselves on risk by significantly increasing withdrawal rates above 4% or moving to an asset allocation (too heavy on stocks?) that causes too much volatility.
Market crashes and corrections may occur. As the stock market reels from Trump tariffs, many stock-heavy retirees have made the memo to buckle up or rebalance to reduce a portfolio’s implied volatility.
For new retirees who still fear burnout, a more conservative withdrawal rate may be best.
Some investors get rich while others struggle because they never learned that there are two completely different strategies for creating wealth. Don’t make the same mistake learn both here.
This post was updated on November 8, 2025, to clarify the conservative nature of the 3% withdrawal rate as well as the annual adjustments to the 4% rule.
In this article, we’ll look at the specific case of a 61-year-old retiree who has outlived his $145,000 salary. He has a solid nest egg (close to $2 million in a 401(k)), large assets spread across other tax-advantaged accounts, and significant amounts of cash and CDs (Certificates of Deposit). They actually invest well with a good amount of liquidity. On the surface, they seem pretty well positioned to enjoy a long retirement.
With a 55-year-old spouse currently working and contributing to a seven-figure retirement nest egg, there really seems no need to fear running out of money. Unless, of course, they plan to step up their lifestyle a few notches after retirement!
With heavy college expenses awaiting their children, the newly retired individual should aim to keep their expenses within the budget. Indeed, college bills can really add up, especially if the child chooses to pursue multiple degrees or even a doctorate. In any case, our new retiree has plenty of liquidity (CDs and cash) to make up the difference if the funds inside the 529 fall short.
Ideally, it would be best to leave the nest egg invested in stocks untouched, especially given the high likelihood of a correction as tariff fluctuations continue throughout March, April and perhaps the summer months.
With such hefty college expenses to consider and the fear of running out of money in retirement, I recommend being more cautious about your withdrawal rate. As always, consult a financial advisor before making a move, as they can gauge your risk tolerance and fear level better than I can!
In any case, the “4% rule” is a common rule that many retirees follow. The original 4% rule calls for withdrawing 4% of the initial portfolio value in the first year, then adjusting that dollar amount annually for inflation. If the math holds out ($3.6 million in total investable assets), a 4% withdrawal rate would mean something like just $145,000 per year; That’s a pretty nice amount for a comfortable retirement.
Given that there has been an increase in stock volatility and the higher expenses coming due in the near future, our retiree appears to be quite cautious (heavy exposure to risk-free assets like CDs, cash), and is still a bit fearful of running out of cash in retirement, I think it is prudent to lean more toward a 3% (or slightly lower) withdrawal rate. For a $3.6 million nest egg, a 3% withdrawal rate would require withdrawing $108,000 per year, which is still a pretty substantial amount. (Note that 3% is generally considered very conservative. Historical simulations show that even in weak market conditions, 3% has a greater than 95% success rate for a 30-year retirement.)
As always, consult a financial advisor for the correct withdrawal rate. If a person’s annual expenses are expected to be much less than $108,000, an even lower withdrawal rate option is available. Personally, I think a withdrawal rate of 2.5-3.0% is reasonable.
In any case, the good news for our retiree is that his spouse is still working and can probably continue working for another 5-10 years.
If the market crashes and college costs turn out to be higher than expected, there’s always the possibility they’ll continue working. It’s always nice to have such options. All considered, I would say our new retiree is doing very well and is flexible enough to consider a conservative withdrawal rate that will provide more peace of mind in retirement.
Remember, the withdrawal rate is not strictly determined! In fact, adjusting on the fly based on the environment or the expectation of big spending may be the way to go. If stocks are tanking and tuition expenses are coming due, a lower withdrawal rate may make sense. This rate can always be increased later (up to 4%) as the person’s comfort level improves.
