Reducing living expenses can be an impactful way for pre-retirees and retirees to maintain their portfolios and preserve assets in the face of market volatility.

SmartAsset studied just how much reducing expenses can elongate the lifespan of a retirement portfolio by analyzing three cost-cutting scenarios. In each scenario (see chart below), the retiree starts out with $500,000 saved in a retirement account to supplement Social Security and withdraws only as much as they need to live. The model assumes inflation of 2.2% and investments returning 5.5% per year.

In the first scenario, the retiree withdraws $2,559 per month from her account to cover living expenses. Retiree B spends $250 less per month than retiree A and Retiree C reduces spending by $500 per month. According to SmartAsset’s model, Retiree A’s savings will last for 21 years and 6 months, while Retiree B’s savings will last 24 years and 9 months and Retiree C’s savings will last 29 years and 3 months.

Complete your profile to continue reading and get FREE access to BenefitsPRO.com, part of your ALM digital membership.

Your access to unlimited BenefitsPRO.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical BenefitsPRO.com information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com

Already have an account?


NOT FOR REPRINT

© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

 

BenefitsPRO

Join BenefitsPRO

Don’t miss crucial news and insights you need to navigate the shifting employee benefits industry. Join BenefitsPRO.com now!

  • Unlimited access to BenefitsPRO.com - your roadmap to thriving in a disrupted environment
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
  • Exclusive discounts on BenefitsPRO.com and ALM events.

Already have an account? Sign In Now
Join BenefitsPRO

Copyright © 2023 ALM Global, LLC. All Rights Reserved.