The Bogleheads' Guide to Investing, 2nd Edition

Chapter Twenty Making Your Money Last Longer Than You Do

I’ve got all the money I’ll ever need, if I die by four o’clock.

—Henny Youngman

“How much of my portfolio can I spend each year without running out of money?” That’s the big question that all retirees and near retirees want answered in no uncertain terms. The thought of being unemployed and running out of money, with years of life ahead, conjures up all sorts of horrible images. We imagine spending our final years eking out a miserable existence, in an unheated flat eating cat food and crackers. We imagine our friends abandoning us, our families ignoring us, and, after dying alone, having very few people attend our minimal funeral.

If that question is plaguing you, you can answer it for yourself with 100 percent certainty. All you have to do is gather together the following information:

• Current value of your portfolio
• Your date of death
• Your portfolio returns every year leading up to your demise
• Your federal, state, and local tax rates each year until your demise
• Inflation rates
• Health care costs
• Amounts of your pension and any other income
• Future value of any real estate you may own
• All unanticipated changes in your pension and health care coverage

Once you have collected all that data, you can then run it through any number of online financial planning programs, and they will give you a spending figure that will allow you to run out of money on your last day on earth. You can even arrange for your check to the undertaker ...