How much can you safely spend in retirement?

There's no single safe number. How much you can spend depends on five things:

• how much you've saved
• how long the money has to last
• how much income arrives no matter what markets do
• what you'll owe in taxes
• how willing you are to adjust if markets fall

This guide walks through each one, then shows how to turn them into a spending level you can check every month.

Start with the gap, not the portfolio

Most retirees have some income that doesn't depend on markets. Social Security, a pension or an annuity all count. Start by subtracting that income from what you want to spend. The gap is what your savings have to cover.

Here's a simple way to set it out:

1. Add up what you plan to spend in a year. Split it into essentials (housing, food, insurance, healthcare) and everything else.
2. Subtract guaranteed income for the same year.
3. Add the income tax you'll owe on the withdrawals and on any taxable income.

The result is the yearly withdrawal your investments need to support. Divide it by your investment balance and you get your withdrawal rate.

A worked example

Rosa and Martin are 66 and 65 and file jointly. They have $1,200,000 in traditional IRAs. Together they receive $42,000 a year from Social Security. They'd like to spend $90,000 a year.

The gap before taxes is $90,000 minus $42,000, or $48,000. But IRA withdrawals are taxable, and so is part of their Social Security once their income passes the thresholds.

Using 2026 federal rules, here's roughly how their taxes work out:

So they need to withdraw about $51,600, not $48,000. That's about 4.3% of their savings. State tax, if their state has one, adds to it.

The figures are rounded. The taxable share of Social Security comes from the federal formula: with joint income above $44,000, up to 85% of benefits can be taxable.

Is 4.3% sustainable?

You may have heard of the "4% rule." It comes from research in the 1990s that tested fixed, inflation-adjusted withdrawals against past US market returns. In the historical periods it tested, a starting rate near 4% lasted at least 30 years.

It's a useful reference point, not a promise. It assumed a fixed mix of stocks and bonds, no taxes, no fees, a 30-year horizon and no change in spending, ever. Real retirements differ on all of these.

A better question is: how likely is it that I'd need to cut spending later, and by how much? That's a question about risk, and you can answer it by testing your plan against many possible market paths.

Testing a spending level against many futures

A simulation replays your plan hundreds or thousands of times. Each run uses a different sequence of market returns and inflation. Then it counts how often the money lasts.

The app does this with actual historical market returns and inflation by default. It strings together random multi-year stretches of real history, so each simulated future has the booms, crashes and inflation spells that really happened. See what chance of success really means for how to read the result.

For Rosa and Martin, the useful output isn't just one percentage. It's the answer to "how much could we spend at a level of risk we can live with?"

Pick a comfort level, not a success rate

Safe to spend in the app works backward from your comfort level. You choose how likely you're willing to be to need a cut later:

• Cautious: about a 1 in 10 chance you'd need to cut later.
• Balanced: about a 1 in 5 chance.
• Flexible: about a 3 in 10 chance.

The app then finds the monthly spending that matches. A higher chance of a cut means a higher starting level. Spending everything that's "safe" at a cautious level often means leaving a lot unspent if markets do well.

A cut isn't the same as running out. In most of the futures that need one, the cut is modest and comes years in. That's why guardrails matter: they tell you in advance which balance would trigger a change. See spending guardrails explained.

What raises or lowers your number

Some changes move safe spending more than others:

• Guaranteed income. Each extra dollar of lifelong income reduces the gap dollar for dollar. Delaying Social Security is one of the few ways to buy more of it. See when to claim Social Security.
• Time horizon. A plan that has to last to 95 supports less spending than one that ends at 85. Plan for longer than average, because about half of people live past their life expectancy.
• Flexibility. If you can trim travel or gifts after a bad year, you can usually start higher. Essentials should be covered by your most reliable sources.
• Taxes. Where your withdrawals come from changes the tax bill. A dollar from a Roth account costs no tax. A dollar from a traditional IRA may cost 10% to 22% or more in federal tax. See withdrawal order.
• Healthcare and big one-time costs. A new roof or a car is easier to plan for than to absorb. The app pays planned purchases and healthcare first, before it works out what's safe to spend.
• A cushion. By default the app leaves 10% of your investments out of what safe-to-spend counts on. You can change it. A cushion protects against spending your last dollar in the final year of the plan.

Spending changes with age

Many households spend more in their 60s and early 70s, then less as travel slows, then more again on care. A flat, inflation-adjusted budget is a simplification. If you expect your spending to change, enter the stages in your plan rather than one average.

Check it every month, not once

A spending level set at 65 shouldn't run on autopilot until 95. Markets move, and so do your plans. The practical habit is simple:

1. Update your balances once a month or once a quarter.
2. Look at this month's safe-to-spend figure and where you stand against your guardrails.
3. Only change spending when a guardrail is crossed. Small moves in between are noise.

This turns a one-time guess into a rule you can follow. It also means bad markets lead to small, early adjustments instead of large, late ones.

Frequently asked questions

Should I count my home equity?

Usually not as spendable savings. You still need somewhere to live. If you plan to downsize or sell, add the sale as a planned event in a specific year, with selling costs. Then it counts from that point on.

What about inflation?

All spending figures in the app are in today's dollars unless you switch the view. Expenses grow with inflation each year, and healthcare usually grows faster. Social Security has cost-of-living adjustments. Most private pensions don't.

Is a higher chance of success always better?

No. A plan that succeeds in nearly every future may mean you're spending much less than you could. The goal is a level you can sustain with changes you'd be willing to make.