Why the simple division gives the wrong timeline
If you have $600,000 and spend $60,000 per year, dividing one by the other suggests ten years. That ignores investment returns, Social Security, pensions, inflation, and spending that begins or ends later. It can be too pessimistic or dangerously optimistic.
The correct question is how much the portfolio must provide in each individual year. That amount may fall when Social Security starts, rise as healthcare costs grow, or disappear temporarily when income exceeds spending.
The annual retirement runway
For each year, begin with the prior year’s ending assets, apply the scenario’s real investment return, add Social Security and other income that has started, subtract that year’s living, housing, healthcare, and debt costs, then record the ending balance.
This creates three outputs that a static withdrawal rate cannot show as clearly:
- Asset trajectory: whether the balance is generally growing, stable, or declining.
- Depletion age: the first modeled age at which assets reach zero, when applicable.
- Ending assets: the modeled balance at the selected planning age if assets do not deplete.
Income timing can create a retirement bridge
Someone retiring at 62 and claiming Social Security at 67 has five years when the portfolio carries more of the spending load. A pension that starts at 65 creates another change. These are not exceptions; they are exactly why runway should be modeled annually.
Spending should change only for stated reasons
Debt should stop at its payoff age. Healthcare and housing can use transparent real-growth assumptions. Discretionary spending can be stress-tested, but the model should not quietly lower it merely to make the plan work.
Interpret the three scenarios correctly
Conservative, Baseline, and Favorable results vary a limited set of assumptions. They do not represent confidence intervals or chances of success. A plan that reaches age 90 in Baseline but depletes at 84 in Conservative deserves attention, but neither output predicts what markets or personal costs will actually do.
Keeping the trajectory in current purchasing power makes future balances comparable with today’s living costs. It is still a planning estimate and does not model account-specific taxes or market volatility.
For a concrete asset scenario, see how $500,000 can produce very different runways.