How Much Money Can I Safely Spend in Retirement?

Vance Albitz, CFP®

Vance And Cathy

The number one question we get from retirees is: from the point that I retire until the end of my plan, how can I make sure I don’t run out of money? I’ll even take that a step further: if you have the assets and you’ve saved up over the course of your life, how much money can you spend to comfortably pay for the things that make you happy in retirement and how much can you spend that allows you to enjoy your retirement without worrying so much that you’re overspending?

The answer to that question is: it’s a calculation. That calculation is something that we sit down with clients who are entering retirement, and we take everything into account. It’s very detailed and we present it to clients. We talk about adjustments that can be made and we go over everything.

Let me just give you a few examples of some things that we go over.

The first thing is expenses. Most people know roughly how much they spend right now. Before entering retirement, we want that budget sheet to be in hand and we want a detailed number of what your expenses are each month. We want you to know exactly what that number is.

The second thing is: how much are you getting in income? Of course, Social Security tends to be most people’s largest income source but you may have a small pension from somewhere, you may be fortunate to have rental property where you are getting rental income, or you may have a part-time job.

Finally how much can we pull from your investments without depleting the principal? Typically, from a broad perspective, the rule of thumb is about 4% from your investments each year in retirement without depleting the principal.

We take all those things into account and we come to a conclusion and ultimately the thing that we always leave clients with is you have to be ready to make adjustments, we have to monitor this plan. Let’s come back every six months or  twelve months. Let’s update these numbers and go over everything because things change in retirement and we want to be there right next to you helping you make those changes.

Vance Albitz


Vance Albitz is a CERTIFIED FINANCIAL PLANNER™ professional. Vance specializes in portfolio management and advises on big-picture financial planning for both individuals and families. Vance graduated from the University of California, San Diego, and played baseball in the minor leagues with the St. Louis Cardinals and Los Angeles Angels. He enjoys reading and spending time with his wife Allison, son Henry, and daughter Kit.

More about Vance

A diversified portfolio does not assure a profit or protect against loss in a declining market.