By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panel consensus is that the article's reliance on the '4% rule' and static portfolio strategies is dangerously outdated for a 68-year-old in the current macro environment. Key risks include sequence-of-returns, inflation, tax drag from RMDs, and the potential for long-term care costs to wipe out assets. A dynamic, tax-aware withdrawal strategy, along with proper asset protection and inflation hedging, is non-negotiable.
Risk: Sequence-of-returns risk in the early retirement years
Opportunity: Implementing a dynamic, tax-aware withdrawal strategy
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
How Can I Make $950k in an IRA Last for Life at Age 68?
Eric Reed
7 min read
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Longevity risk is at the heart of retirement planning. You wind down work and income, counting on savings to carry you through the rest of your life. But with careful saving and money management, it might be possible to make this money last. For example, say that you recently reached retirement age at 68 and have $950,000 in a pre-tax traditional IRA. Accounting for longevity risk, Social Security, RMDs and more can help you more accurately plan ahead.
Longevity risk is the chance that you will outlive your retirement savings.
It’s not uncommon for a household to underestimate how long they will live and, as a result, how much money they will need. This is, in part, because population-wide averages are misleading. According to the CDC, across all Americans the average lifespan for a woman is 79.3 years old and 73.5 for a man. However, the average life expectancy for those 70 and older could be between 80 and 90, according to the SSA.
This dramatically changes the math for retirement savings. So if you plan on retiring at full retirement age of 67, a typical household should anticipate at least 20 to 25 years in retirement, with the savings to fund their life over that time.
Generating Income in Retirement
Using the example that you’re 68 years old with $950,000 in an IRA, how can you make sure this portfolio lasts? To a significant degree, it will depend on managing your income.
Social Security
First, figure out your Social Security benefits. This income is guaranteed for life, so you can count on it to supplement your retirement portfolio.
For example, the average retiree received $1,860 per month in Social Security benefits, according to SSA data from Jan. 2024. This comes to $22,320 per year for life, and it will likely continue to grow with federal annual cost-of-living adjustments (COLAs) going forward.
Retirement Account Income
For many households, a sizable percentage of income will come from IRA, 401(k), 403(b) or other retirement portfolio earnings. A popular starting point over the years has been the 4% rule, in which you plan on investing modestly and withdrawing 4% of your portfolio each year for 20+ years in retirement. On a $950,000 IRA, this would generate $38,000 a year of that income. Combined with Social Security, that comes out to a grand total of $60,320 per year, though you again may need to increase that due to inflation.
To address longevity risk, consider weighing your portfolio with income assets. These are assets such as bonds, dividend-stocks and savings accounts, which generate returns without having to sell the underlying asset. While all investments have risk, successful income assets can provide indefinite portfolio income, albeit at a relatively low rate compared to their investment counterparts.
Annuity contracts are a potential income asset option for retirees. These are contracts that can guarantee a fixed payment for life. For example, a $950,000 annuity contract purchased at age 68 could, in theory, generate $6,360 per month or $76,320 per year, according to Schwab’s income annuity calculator.
However annuities, and all other income assets, typically expose your portfolio to inflation risk. Without significant growth, your portfolio will lose purchasing power over time.
To address this risk, it’s often wise to balance your retirement portfolio with some equities and other growth-oriented assets. Typically, a possible way to do this is through mixed-asset funds like an index fund or a mutual fund. These portfolio-based assets can give your retirement account exposure to growth investments, while mitigating the risk involved with selecting equities on a more singular basis.
Spending and Taxes in Retirement
If income is one half of managing longevity risk, spending is the other. First look at your tax situation.
With a pre-tax, traditional IRA or 401(k), you will need to pay income taxes on every withdrawal you make. That will reduce your effective rate of income and can also increase your Social Security benefit taxes. You can mitigate this by rolling over your IRA into a Roth IRA, but that would involve sacrificing a significant portion of the account to up-front income taxes.
If you keep your money in a pre-tax IRA, don’t forget to anticipate required minimum distributions (RMDs). With our example, your $950,000 IRA is the only form of retirement account you have, so it’s unlikely that you will withdraw less than your annual RMD. Once you reach age 73, just make sure to remember that this minimum exists, since the tax penalties for neglecting it can be severe.
Beyond that, consider the lifestyle you want. When it comes to making a retirement account last, much of the issue will be decided by how much you spend. A few key issues include:
Do you own your own home or rent?
Do you live in an expensive or inexpensive city?
Can you comfortably move to extend your savings?
What kind of luxuries and hobbies do you enjoy?
Do you have particular medical needs?
What kind of regular bills do you carry?
Do you already have long-term care and supplemental health insurance?
What kind of estate plans do you have?
All of these issues will determine your needs and flexibility in retirement. For example, someone living in a small town will likely find a $950,000 IRA more than enough for a comfortable retirement even with minimal portfolio growth. Someone living in an expensive city, on the other hand, may need to invest for significant gains in order to afford their standard of living. A financial advisor can help you determine your needs and an appropriate strategy for your goals.
To make sure your savings last the rest of your life, look at your rate of spending and your projected portfolio income. If this looks like something that can comfortably last well into your 90s, you’ve probably hit the right balance. If not, consider either investing for more growth with a plan for the accompanying risks or finding areas to cut spending.
Tips for Managing Your Portfolio in Retirement
Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
As a retiree, don’t forget that it’s important to keep investing even in retirement. After all, ideally you will have anywhere from 25 to 30 years to enjoy the returns from your portfolio. Check out SmartAsset’s guide to retirement investing to learn more.
Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid -- in an account that isn't at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.
Four leading AI models discuss this article
"The combination of RMD-induced tax brackets and sequence-of-returns risk makes a static 4% withdrawal rate a recipe for portfolio exhaustion before age 90."
The article's reliance on the '4% rule' is dangerously outdated for a 68-year-old in the current macro environment. With inflation remaining sticky and RMDs looming at age 73, a $950k portfolio is highly sensitive to sequence-of-returns risk. If a market correction hits in the first three years of retirement, the withdrawal rate effectively spikes, depleting principal faster than recovery can offset. The article glosses over the 'tax bomb' inherent in traditional IRAs; once RMDs kick in, the retiree faces a forced taxable income spike that could push them into a higher marginal bracket, simultaneously triggering higher Medicare Part B premiums (IRMAA). A static portfolio won't survive; a dynamic, tax-aware withdrawal strategy is non-negotiable.
The 4% rule remains a robust heuristic because it assumes a diversified 60/40 portfolio that historically captures enough equity risk premium to outpace inflation over long horizons.
"The article underestimates after-tax withdrawal rates and sequence risk while overstating the sustainability of a $950k portfolio without clarifying the retiree's actual spending baseline or geographic cost structure."
This article is a generic retirement planning primer masquerading as actionable guidance. The $950k example is mathematically sound—4% rule yields $38k, plus $22.3k Social Security = ~$60k annually—but the piece glosses over the real tension: a 68-year-old with only a traditional IRA and no other assets faces severe sequence-of-returns risk in year one of a 25-30 year drawdown. The annuity math ($76.3k/year) is presented as alternative but ignores that locking $950k into a fixed payout eliminates inflation hedging entirely. Most critically, the article treats tax drag as a minor friction point when RMDs + Social Security taxation could easily push effective withdrawal rates above 5-6% after-tax, especially if portfolio returns disappoint.
The article's core thesis—that $950k can sustain a retiree—may be dangerously optimistic if that person lives to 95 with inflation averaging 3% annually and market returns revert to historical 7% real returns rather than the 8-10% many retirees assume.
"N/A"
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"Relying on a static 4% withdrawal plus a high, fixed annuity from a $950k IRA is a fragile framework that ignores sequence risk, inflation, taxes, and long-term care costs, making lifetime sustainability unlikely in many real-world scenarios."
The article presents a seemingly workable plan for a 68-year-old with $950k in an IRA, leaning on a 4% withdrawal rule plus a high-dollar annuity and Social Security. But it glosses critical risks: sequence-of-returns risk in the early retirement years, persistent inflation eroding fixed income, tax drag from traditional to Roth, RMDs, and the true pricing/availability of inflation-adjusted annuities. It also underestimates healthcare and long-term care costs over 25–30 years. Without a dynamic withdrawal strategy, inflation hedges, or long-term care protections, the plan can break down far sooner than expected if markets wobble or medical costs spike.
Strong counter-case: in favorable-rate environments, a deliberate Social Security claiming strategy plus inflation-protected income via annuities and bonds can realistically fund 25–30 years; the article’s pessimistic tone assumes suboptimal tax and withdrawal choices and ignores tools like QLACs and dynamic spending.
"The debate over withdrawal rates is secondary to the catastrophic, unhedged risk of long-term care costs which can deplete a $950k portfolio entirely."
Claude, your focus on annuity inflation risk is valid, but you ignore the 'longevity hedge' value. For a 68-year-old, the primary risk isn't just inflation—it's outliving assets. Gemini, your fear of IRMAA (Medicare surcharges) is correct but secondary to the catastrophic risk of long-term care costs. A $950k portfolio is essentially wiped out by a five-year nursing home stay. We are debating withdrawal rates while ignoring the biggest balance sheet liability: the health-wealth gap.
"Long-term care risk is real but requires Medicaid planning, not portfolio optimization—the article's silence on this is a gap, not a flaw in the 4% math itself."
Gemini's long-term care pivot is the real stress test, but we're conflating two separate problems. A $950k portfolio *plus* Social Security *plus* Medicare coverage isn't wiped by nursing home costs—it's wiped if the person needs *five years* of care *and* has no Medicaid planning. That's a Medicaid spend-down problem, not a portfolio math problem. The article should flag asset protection strategies (irrevocable trusts, Medicaid planning), not just withdrawal rates. We're debating the wrong variable.
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"Nursing-home tail risk matters, but it shouldn't overshadow explicit strategies for longevity, liquidity, and tax-efficient withdrawal."
Gemini, your emphasis on long-term care tail risk is valid but risks turning asset protection into a universal wipeout scenario. A five-year nursing-home stay is not an inevitability for every retiree, and Medicaid/asset-protection planning can alter outcomes; the article should quantify probabilities and include concrete mitigants beyond withdrawal-rate caution. The real, tractable risk remains sequence-of-returns and tax drag from RMDs—these drive failure far more reliably than a single care event.
The panel consensus is that the article's reliance on the '4% rule' and static portfolio strategies is dangerously outdated for a 68-year-old in the current macro environment. Key risks include sequence-of-returns, inflation, tax drag from RMDs, and the potential for long-term care costs to wipe out assets. A dynamic, tax-aware withdrawal strategy, along with proper asset protection and inflation hedging, is non-negotiable.
Implementing a dynamic, tax-aware withdrawal strategy
Sequence-of-returns risk in the early retirement years