Jul 12, 2026
The typical retirement account balance among Americans 65 and over is surprisingly low, with an average balance of just $330,186 and a median of $103,202, according to Vanguard. Some retirees, however, have far more.
While the amount you have invested matters, it’s not the only number to pay attention to. You must also consider your annual withdrawal rate, or the amount of money you take out of your accounts. If you withdraw money too fast, you won’t leave enough invested to keep earning sufficient returns to cover your lifestyle in retirement, and you take a risk of your money running dry. This is true even if you start with a lot.
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Let’s pretend, for example, that Mark is 70 years old. He retired at 67 with $3 million, but he already spent $1 million of it in his first three years of retirement, and now he’s worried about making his cash last.
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So, how can Mark ensure that what’s left of his nest egg can support him throughout his retirement? Financial experts spoke to Moneywise to provide some advice on what Mark should do next.
Take stock of where the $1 million went
The first thing Mark needs to do is to take a hard look at how he spent so much so quickly.
“If someone were to have spent $1,000,000 in the first three years of retirement out of a total $3,000,000 nest egg they had saved, this would ring some alarm bells in the event the expenses were not expected,” Clifford Cornell, a CFP and financial advisor at Bone Fide Wealth, told Moneywise.
Steve Azoury, a ChFC and owner of Azoury Financial, agreed. “It’s important to understand what the $1 million was spent on,” Azoury said. “If the $1 million was spent on eliminating debt, like paying off homes and cars, then payments on those items wouldn’t need to be paid anymore in retirement.”
Cornell recommended taking a close look at all the one-off expenses that won’t recur to make sure that these were a substantial part of the initial spending. If they weren’t, this could be a big problem. “If this is someone who is just now realizing their spending rate three years in, this can be a serious risk to their retirement,” he said.
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Identify fixed costs and how much to spend going forward
After Mark determines why he spent so much, the next step is making a plan for what he can and should spend going forward so his remaining $2 million doesn’t disappear just as fast.
“With only $2 million left, they obviously cannot spend $1 million a year, and without payments on debts, they should budget and not dig into any principal,” Azoury said.
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Principal refers to the sum of money Mark invested in his working years. In most cases, experts advise that retirees only withdraw the earnings from their investments, assuming they will be replaced the following year.
Cornell recommends working backwards to see how much Mark’s remaining $2 million portfolio can produce at a comfortable withdrawal rate, then limiting spending to that amount. While the standard 4% withdrawal rate can serve as a starting point, Mark may want to work with a financial advisor to create a personalized plan. Still, using the 4% rule as a guide, Mark would be able to spend around $80,000 based on the $2 million he has invested.
“Their current expense figures may drastically differ from what a $2,000,000 portfolio can provide,” Cornell said. “This is where lifestyle changes may need to be made. From there, I’d recommend keeping a very close eye on their spending until they get into a routine around a safe withdrawal rate.”
Invest the money wisely
Finally, Mark needs to make sure he’s invested wisely.
Azoury recommends Mark consider his risk tolerance and make sound investment choices, which could include “a mix of equities and fixed accounts.” He also suggested that Mark “may want to consider an income annuity that would lock in income, assuring money will come in throughout his retirement.”
By setting a detailed budget based on a safe withdrawal rate and making sure the money is earning reasonable returns, hopefully Mark can preserve what’s left of his nest egg so he can have the secure retirement he deserves.
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Christy Bieber has 15 years of experience as a personal finance and legal writer. She has written for many publications including Forbes, Kilplinger, CNN, WSJ, Credit Karma, Insurify and more.
