• How Long Will Your Money Last in Retirement?

  • by Guest Author
money in retirement

There is a multitude of questions facing people who want to retire. Will I have enough? What if I develop a chronic illness? Should I sell my house?

Overall, their main focus is: how long will my money last in retirement? Everyone wants to make sure that their nest egg is big enough to last them until they die, and maybe even leave something behind for their family.

A question that broad has no general answer. Instead, it all depends on the factors that affect your retirement. Here are the biggest elements that determine how long your money will last in retirement.


A study from the Employee Benefit Research Institute found that 37% of retirees said they underestimated their retirement costs, many because of healthcare. Healthcare costs continue to outpace inflation, and there are no signs of a slowdown.

Many soon-to-be retirees incorrectly assume that Medicare will cover all or most of their healthcare bills. They don’t realize that they’ll still be responsible for Medigap insurance and prescription drug coverage.

Retirees who need at-home care or nursing homes will find that their money runs out even faster. The average stay in an assisted living facility is $3,500 a month and many end up having to stay for months or years at a time.

Where You Live

Residing in a state like California or New York means your money won’t go as far compared to retirees in the South or Midwest. For example, $1 million in Mississippi will last 26 years and four months, but only 11 years and 11 months in Hawaii. That means a prospective retiree in Jackson, Mississippi can quit working more than 15 years earlier than his peer in Honolulu.

Local and state taxes have a huge effect on your retirement savings. If you’re living somewhere with high property taxes, you’ll pay more every year to stay in your home than someone in a state with lower property taxes.

Housing Expenses

How far your money goes in retirement partly depends on your living expenses, the biggest of which is housing. Unfortunately, a third of seniors enter retirement with a mortgage balance, the average of which is $118,000. Many expect to spend almost a decade paying it off.

High housing expenses can severely limit your discretionary spending and cause you to run out of money faster than you anticipated. To prevent this, try to downsize or pay off your mortgage before retirement.

Other Expenses

Many retirees wrongly assume that life in retirement will be cheap. They won’t have to drive to work every day, they’ll have time to cook at home, and they’ll want to take it easy. But with retirement comes hours of free time and the best way to fill it is with leisurely activities.

Don’t think that your retirement will be spent only volunteering and babysitting your grandkids. You might also want to take cruises with your spouse, golf every week, and enjoy the local restaurant scene. All of that takes money.

A Reverse Mortgage Can Help

Many people use the reverse mortgage to help their money last. Some people choose to live on their reverse mortgage proceeds while they allow their other retirement assets to grow in value over time. This strategy can give them access to more money in the future. Others use the reverse mortgage as an emergency fund, only drawing money from it when they experience unexpected costs.

Some use their money for immediate needs or desires. Such needs could be in-home care, home improvements, or travel and leisure. A person may also use their proceeds to purchase a home if they are interested in downsizing or moving to an area where the cost of living is cheaper.

The reverse mortgage can pay off your existing mortgage and does not require any monthly payment after that. This benefit can increase your monthly cash flow savings. For example, if your mortgage payment were $600 per month, you’d have an extra $600 each month to use however you like because that mortgage payment is no longer required. Just remember, you must pay your property taxes, homeowners insurance, and home maintenance costs to avoid foreclosure.

When it comes to finances and your retirement, we always recommend you speak to your financial advisor.

Zina Kumok is a freelance writer and owner of www.consciouscoins.com.