How Much Can You Actually Spend in Retirement?
If you’ve saved a couple of million dollars for retirement, you’ve already done the hard part. But here’s what I keep seeing: the people who saved the most are often the ones who can’t spend any of it.
Vanguard just looked at retirees ages 60 to 72, and 78% of them hadn’t taken a single withdrawal. Prudential surveyed people 50 and older this year, and among those with half a million or more, 61% said they don’t feel comfortable spending their savings on things they enjoy. 70% of that group said they’d rather leave money behind than risk running out.
If that sounds like you, it isn’t a flaw. The discipline that built your savings is the same thing making it hard to use them. Here’s how to find the number you’re actually allowed to spend.
Your money has had one job
For forty years, your money had one job: grow, and don’t run out. That made sense. When you’re adding to an account every month, protecting it is the whole point.
But retirement adds a second job, and almost nobody gives it to their money. The second job is paying for the life you saved it for. When your money only has the first job, every dollar you spend feels like a loss. Give it the second job, and spending stops feeling like failure. It starts feeling like the plan working.
Two versions of the same couple
Take a hypothetical couple, Mark and Linda. They’re 66, with $2.5 million saved. Social Security covers about $60,000 a year. Their essentials run about $90,000. So their savings only need to cover about $30,000 a year. And for three years running, they’ve put off a trip to Italy.
Now picture two versions of them. In one, they take only that $30,000, rising with inflation. In the other, they take an extra $60,000 a year for the things they keep postponing: travel, time with the grandkids, the kitchen.
In a simplified, hypothetical illustration that assumes a 5% annual return and 3% inflation, with no taxes or fees and withdrawals at the end of each year from 66 through 89, the first couple has about $6.3 million at age 90. The second spent roughly $2.1 million more on their lives, and still has about $2.7 million. This is a hypothetical example, not a projection.
In this example, both of them still have money at 90. The difference between those two lines isn’t whether the money lasts. It’s 24 years of living they could afford and didn’t do.
There’s a popular book called Die With Zero, which argues you should plan to spend everything you have. I’m not telling you to die with zero. I’m telling you to decide what you die with, on purpose. If you want to leave your children two million dollars, wonderful. Make that a decision. Don’t let it happen because you were too nervous to book the trip.
How to find your permission number
Most people can’t say how much they’re allowed to spend, because they’ve never written down how long the money has to last. In the Prudential survey, 44% of people with half a million or more said they don’t know.
Here’s how I’d work it out, in three steps:
- Cover the floor. Add up the essentials, subtract your guaranteed income, and set aside two to three years of the gap, so a bad market never decides whether the bills get paid. Two to three years is a starting point; the full range I use is two to five, depending on how much of your floor is already covered by income that doesn’t move with the market.
- Set the horizon, in writing. Pick an age to plan to. Ninety-five is a common planning age. A date turns a vague worry into something you can actually work with.
- Name the permission number. That’s the amount above the floor your plan can absorb every year and still hold up if the first few years of retirement are rough.
For Mark and Linda, Social Security and the reserve cover the floor. The horizon is 95. The extra $60,000 a year is their candidate permission number, the one I’d test against a bad first few years before they booked a single flight. That’s the difference between hoping you can afford something and knowing you can.
In my practice, this is part of what I call Income Architecture. In plain terms, you always know which dollars cover the bills and which dollars are yours to enjoy. What it feels like is simple: you book the trip, and you don’t check the balance when you get home.
The years won’t wait
If you keep waiting, the money may hold up just fine. The years won’t wait. A trip at 68 and the same trip at 81 aren’t the same trip.
And money you save and never spend doesn’t disappear. It becomes an inheritance by default, whether you planned one or not. So the question isn’t “will I run out?” You’ve probably answered that one already. The question is: what are you still waiting to be allowed to do?
Decide what you die with, on purpose.
If you’d like help finding your own permission number, you can book a complimentary 30-minute call at jonathanpeters.net/consultation.
Sources
- Vanguard, How America Retires 2026 (78% of retirees ages 60 to 72 took no withdrawals) and press release, October 29, 2026.
- Prudential, 2026 Retirement Pulse, October 1, 2026 (3,023 adults 50+; the 61%, 70% and 44% figures are for respondents with $500K or more).
- Illustration: $2.5 million starting balance at 66; withdrawals of $30,000 vs $90,000 a year, rising 3% annually, taken at the end of each year from 66 through 89; 5% annual return; balances shown at 90; no taxes or fees. Hypothetical, not a projection.
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