What is a retirement runway? How to calculate yours.
Search for "retirement runway" and the first answer is usually one line of arithmetic. It's a fair start and a misleading finish. This page gives the definition and the formula, then uses Runway's planning engine to show what the formula leaves out and how far each omission moves the answer.
What is a retirement runway?
Your retirement runway is the number of years your savings can fund your spending. The term comes from startups, where runway is cash divided by monthly burn: how long until the money is gone. For a retiree it answers a different question from "do I have enough?" A target such as $1.2 million says whether you have reached a number. A runway says how far the money goes at your actual spending, and it moves when you change your spending, your income or your accounts.
What is the retirement runway formula?
Retirement runway (years) = savings ÷ net annual draw.
The net annual draw is what you spend in a year, including taxes and health costs, minus guaranteed income such as Social Security, pensions and annuities. Using round numbers, $1,000,000 of savings and $50,000 a year of spending is a runway of 20 years. If you spend $90,000 and Social Security pays $50,400, you draw $39,600 from savings and the runway is 25.3 years. The same arithmetic connects a runway to a withdrawal rate, because runway = 1 ÷ withdrawal rate:
| Withdrawal rate (share of savings per year) | Simple runway |
|---|---|
| 3% | 33.3 years |
| 4% | 25.0 years |
| 5% | 20.0 years |
| 6% | 16.7 years |
That is why the 4% rule and a 25-year runway are the same statement. The division treats savings as a static pile and spending as a flat line. Real retirements are neither.
Why isn't the simple answer the real answer?
Take a married couple, both 65, with $1,000,000 split across a traditional IRA ($600,000), a Roth IRA ($100,000), a brokerage account ($250,000) and cash ($50,000). They spend $50,000 a year in today's dollars and have no Social Security or pension, so the answer is the runway of the savings alone. The simple runway is 20 years. Here is what Runway's engine finds as each piece of reality is added:
| Step | What it adds | Result |
|---|---|---|
| 1 | The simple division | 20 years |
| 2 | Medicare Part B and D premiums, which the engine adds on top of the $50,000 (no growth, no inflation, no tax; all Roth) | Runs out in year 19, at age 83 |
| 3 | Average market returns (60% stocks, 40% bonds) and 2.5% inflation, still all Roth | Lasts past age 110; $954,768 left after 20 years (today's dollars) |
| 4 | The real account mix, with tax on traditional IRA and brokerage withdrawals | Lasts past age 110; $908,587 left after 20 years (today's dollars) |
| 5 | Real market history: each of 125 starting years from 1872 to 2024 | Ran out before 95 in 45 of 125 (36%); the earliest, a 1969 start, at age 80 |
| 6 | 2,000 random market paths | 69.0% chance the money lasts to 95; the 10th-percentile outcome ends at $0 |
The table shows four things the division leaves out, in four different directions:
- Returns and inflation lengthen the runway, but only on average. At average returns this household never runs out (step 3), yet one start in three did in the real history (step 5). The average case is the least informative number. See return assumptions and volatility.
- The order of returns decides who runs short. Withdrawals during a downturn sell shares that can't recover, so a bad first decade does far more harm than a bad last one. Two retirements with the same average return, about 6.3% a year, ended $519,000 apart in our sequence-of-returns guide.
- Taxes depend on where the money sits. For a couple both 65 or older with no other income, $50,000 from a traditional IRA costs $1,450 in federal tax (2.9%), while the same $50,000 from a Roth costs $0 (see tax brackets for retirees). The cost rises with income, because every dollar from a traditional account is ordinary income.
- Health costs and guaranteed income change the draw. Medicare premiums shorten the runway; Social Security and pensions lengthen it by shrinking what you take from savings.
How long should my retirement runway be?
At least as long as the age you might live to. SSA's 2023 period life table puts the chance that at least one of a man and a woman, both 65, is alive at 95 at 21.3%, about 1 couple in 5 (how long should a retirement plan last). Thirty years is a common planning horizon for a couple retiring at 65. For the household above, the longer the simple runway, the higher the chance of covering those 30 years:
| Annual spending | Simple runway | Chance the money lasts to 95 (Monte Carlo) | Share of the 125 historical starts that lasted to 95 |
|---|---|---|---|
| $55,000 | 18.2 years | 53.9% | 51.2% |
| $50,000 | 20.0 years | 69.0% | 64.0% |
| $45,000 | 22.2 years | 81.7% | 75.2% |
| $40,000 | 25.0 years | 92.3% | 88.8% |
For this household, a simple runway of 25 years went with a 92% chance of lasting 30 years, and a runway of 20 years with 69%. Another household's numbers will differ with its mix of stocks and bonds, its taxes and its Social Security. See will my money last for how each kind of test works.
What extends a retirement runway?
Three levers, with what each did to the same household:
- Spend less. The table above: $5,000 less a year raised the Monte Carlo chance of lasting to 95 from 69.0% to 81.7%.
- Add guaranteed income. Add Social Security of $50,400 a year (claimed at 67 by both spouses) and the same $1,000,000 supported $80,000 of spending with a 98.4% chance of lasting to 95, $90,000 with 82.5% and $100,000 with 50.8%. Social Security reduces the draw you take from savings every year from the day it starts (see when to claim Social Security).
- Use Roth conversions with care. A conversion pays tax now to lower it later, so it is mainly a tax tool and not always a runway extender. For this household it lowered lifetime federal tax in the average-return projection from $70,868 to $35,766 (converting up to the 10% bracket), but the tax comes out of savings today, and the chance of lasting to 95 fell:
| Roth conversions | Chance the money lasts to 95 (Monte Carlo) | Historical starts that lasted to 95 |
|---|---|---|
| None | 69.0% | 64.0% |
| Up to the 10% bracket | 68.8% | 64.0% |
| Up to the 12% bracket | 64.1% | 57.6% |
| Up to the 22% bracket | 57.9% | 52.8% |
Conversions pay off most when a plan already clears its success target with room to spare, which is why Runway's Best Plan only recommends a conversion level where the plan keeps at least a 90% chance of lasting. See when a Roth conversion pays off for the tax side.
How do I calculate my retirement runway?
- Add up your investable savings across every account: 401(k), IRA, Roth and taxable. Home equity doesn't fund groceries unless you sell or borrow against it.
- Estimate your annual spending in today's dollars: what you actually need, not a percentage of your old salary, including taxes and health costs.
- Subtract guaranteed income such as Social Security and pensions, to get your net annual draw.
- Divide savings by the draw. That is your simple runway.
- Test it. Check taxes by account type, Medicare premiums, inflation and bad market sequences, because those are what the division misses.
Step 5 is where a spreadsheet stops being enough. Runway's free planner takes your real accounts, Social Security and spending, and shows how long the money lasts across thousands of simulated markets and every real starting year back to 1872.
Find your own runway. Runway turns your accounts, Social Security and spending into a year-by-year plan with taxes, Medicare and market stress tests — free to start, no credit card required.
Try the plannerFrequently asked questions
What is a retirement runway?
A retirement runway is the number of years your savings can fund your spending in retirement. It is a duration ("my money lasts about 25 years") rather than a target balance ("I need $1.2 million"), so it changes as your savings, spending and the markets change.
How do you calculate a retirement runway?
Divide your savings by your net annual draw: yearly spending, including taxes and health costs, minus guaranteed income such as Social Security and pensions. $1,000,000 ÷ $50,000 a year is 20 years. Treat that as a first estimate. Inflation, taxes and the order of market returns can move the real answer a long way.
What is a good retirement runway?
Long enough to cover the age you might live to. About 1 in 5 couples has someone alive at 95, so a couple retiring at 65 should plan for about 30 years. In Runway's example, a simple runway of 25 years gave a 92% chance of lasting 30 years in a Monte Carlo test, and 20 years gave 69%.
What is the difference between a retirement runway and a nest egg?
A nest egg is a target balance; a runway is how long your money lasts from here. A target asks whether you have reached a number. A runway shows how far the money goes at your actual spending, and how much each decision, such as spending less or delaying Social Security, adds to it.
Does a retirement runway include Social Security?
It should, as income that reduces your draw, not as savings. If you spend $90,000 and Social Security pays $50,400, you draw about $39,600 from savings, and $1,000,000 lasts about 25 years on simple division. Until benefits start, the full amount comes out of savings.
How does the 4% rule relate to a retirement runway?
Withdrawing 4% of savings a year is a simple runway of 25 years (1 ÷ 0.04). William Bengen's 1994 study found that, in his historical data, a first-year 4% withdrawal adjusted for inflation was never exhausted before 33 years. The rule is a historical result about sequences of returns, not a guarantee.
Why is my real runway different from savings divided by spending?
The division ignores growth, inflation, taxes, Medicare premiums and the order of returns. Growth and Social Security lengthen the runway; inflation, taxes and an early market decline shorten it. In Runway's example, 45 of 125 historical starting years ran out of money before 95, even though the average-return projection never ran out.
Does a Roth conversion extend my retirement runway?
Not automatically. A conversion pays tax now to lower tax later, which can reduce lifetime tax and help heirs, but the tax comes out of savings today. In Runway's example (a $1,000,000 household with no Social Security), converting up to the 12% bracket lowered the Monte Carlo chance of lasting to 95 from 69.0% to 64.1%.
How can I extend my retirement runway?
Spend less, add guaranteed income, or work or claim later. Each has a measurable effect: in Runway's example, spending $45,000 instead of $50,000 raised the chance the money lasts to 95 from 69.0% to 81.7%. Guaranteed income works on the other side: with Social Security of $50,400 a year, the same $1,000,000 supported $90,000 of spending with an 82.5% chance of lasting to 95.
Is a retirement runway the same as a startup's financial runway?
The term is borrowed from startups, where runway is cash divided by monthly burn. A retiree's version divides savings by net annual spending, but the horizon is uncertain (you don't know your end date) and market returns and taxes act on the balance while you draw it down.
Where can I calculate my retirement runway?
By hand with savings ÷ net annual draw, or with a planner that adds taxes, inflation, Medicare and market sequences. Runway's free planner shows how long your money lasts under each, account by account. Whatever you use, check that it handles the four things the simple division leaves out.
How were these numbers computed?
The arithmetic (the runway formula, the withdrawal-rate table and the Social Security examples) is plain division. Every other figure is from Runway's planning engine for one household: a married couple, both 65, with $1,000,000 in a traditional IRA ($600,000), a Roth IRA ($100,000), a brokerage account ($250,000, cost basis $175,000) and cash ($50,000), spending $50,000 a year in today's dollars with no Social Security or pension, filing jointly under 2026 federal tax law. The Social Security rows add benefits of $2,400 and $1,800 a month at full retirement age (PIAs), both claimed at 67, which pays $50,400 a year. Runway's defaults apply: 60% stocks and 40% bonds, stock returns of 7.5% and bond returns of 2.93% after inflation, volatility of 16% and 6%, and 2.5% inflation. Plans run to age 95 unless noted; the average-return projection runs to 110. The Monte Carlo figures use 2,000 paths with a fixed seed, and the historical figures replay every starting year from 1872 to 2024 with real U.S. returns. The couple's tax figures are federal only (IRS Revenue Procedure 2025-32), with no state tax. Runway adds Medicare Part B and D premiums to spending. The 1-in-5 figure is from SSA's 2023 period life table and assumes the two lifespans are independent. Balances are in today's dollars. These are illustrations for one household, not forecasts.