I just retired at age 61 and left my $145,000 salary — how much can I pull from my nest egg every year without the fear of running out of money?

Running out of money in retirement ranks among the deepest fears of soon-to-be retirees, and the anxiety is well-founded. Few financial setbacks hit as hard as realizing mid-retirement that the numbers no longer work. Returning to work after tasting freedom is painful, and re-entering the workforce rarely means landing the same salary. There is also no guarantee that someone can handle their previous role as effectively years later.

The fear runs surprisingly deep, and it keeps spreading. A 2025 RetirementLiving survey of 1,000 adults aged 60 and older found that 58% worry their finances simply will not last through retirement. The 2026 Annual Retirement Study from the Allianz Center for the Future of Retirement framed the anxiety in starker terms: two in three Americans (67%) now worry more about running out of money than about death itself, up 10 percentage points from 57% in 2022. The generational spread is striking. Gen Xers registered the highest concern at 73%, followed by millennials at 69% and baby boomers at 59%. Separately, the same study found that 48% of Americans have no written financial plan, and 57% say they feel anxious about their financial future whenever their retirement accounts suffer a loss from a market drop.

Part of what makes the anxiety so persistent is that nominal incomes are rising while savings cushions are shrinking. According to Bureau of Economic Analysis data, the personal savings rate fell from 6.2% in the first quarter of 2024 to approximately 3.9% in the first quarter of 2026, even as wages climbed, leaving many households with far less financial runway than their paychecks might suggest.

This anxiety is by no means limited to those who are financially stretched. High-net-worth individuals, even those who appear to have everything in order, share the same unease. Emergency healthcare costs or a sharp market correction can put an otherwise sound retirement plan under serious stress.

That is why retirees uncertain about the sustainability of their nest egg should err on the side of caution and work with a registered financial planner to get a second opinion. Being overly conservative with investments can limit long-term growth, but it also provides enough cushion to absorb a catastrophic scenario if one actually materializes.

Retirees should avoid over-extending themselves on risk, whether by pushing withdrawal rates well above 4% or chasing an asset allocation so heavily weighted toward stocks that it introduces dangerous volatility.

Market crashes and corrections happen. With equities rattled by tariff uncertainty in recent years, many stock-heavy retirees have already gotten the message: rebalance to reduce volatility or accept the turbulence that comes with an aggressive allocation.

Enter the case of a 61-year-old new retiree

This piece examines the specific situation of a 61-year-old who has just left a $145,000 salary behind. The retiree holds close to $2 million in a 401(k), meaningful assets spread across other tax-advantaged accounts, and a substantial sum parked in cash and Certificates of Deposit (CDs). The portfolio is well constructed and carries strong liquidity, which on the surface makes this person look quite well-positioned for a long retirement.

Add a spouse, aged 55, who is still working and building a seven-figure nest egg of their own, and the case for financial security grows even stronger. The risk of running out of money is low, unless the couple plans a significant lifestyle upgrade once both have stopped working.

One genuine complicating factor is hefty college expenses on the horizon for their child. College bills escalate quickly. According to College Board data for 2025-26, tuition and fees alone average $11,950 per year at public four-year in-state schools and $45,000 at private nonprofit universities. When room, board, books, and other expenses are factored in, the total annual cost of attendance reaches roughly $30,990 at an in-state public school and $65,470 at a private institution. Those numbers climb further if the child pursues graduate study or a professional degree. Fortunately, ample liquidity in CDs and cash can cover any shortfall if their 529 plan falls behind.

The stock portion of the nest egg should ideally stay untouched, particularly while market uncertainty persists. Selling equities during a downturn locks in losses that can take years to recover. This is the core problem known as sequence-of-returns risk: poor results in the early years of retirement, combined with ongoing withdrawals, can permanently impair a portfolio even if markets eventually rebound.

With large college expenses on the near horizon and lingering anxiety about outliving savings, the wiser path is to be conservative with the withdrawal rate, at least for now. A financial advisor can gauge personal risk tolerance and spending needs far better than any general article can.

What is a good withdrawal rate to target?

The “4% rule” remains the most widely cited starting point for retirees. Developed by financial planner William Bengen and published in the Journal of Financial Planning in 1994, it calls for withdrawing 4% of the initial portfolio in the first year, then adjusting that dollar figure upward each year for inflation. For a $3.6 million total investable portfolio, a 4% rate would yield just shy of $145,000 per year, a comfortable sum by almost any measure.

Current research points to a somewhat more conservative baseline. Morningstar’s 2025 “State of Retirement Income” report pegs the safe starting withdrawal rate at 3.9% for retirees seeking a steady, inflation-adjusted income stream over a 30-year horizon, assuming a 90% probability of having assets remaining at the end of that period. That figure applies to portfolios with an equity weighting of 20% to 50%, and it is up from 3.7% in the prior year’s research, reflecting improved return expectations across asset classes. Morningstar uses forward-looking capital markets assumptions rather than purely historical data, which is why the figure shifts from year to year as the market outlook changes. Worth noting for a 61-year-old: Morningstar’s own research shows that extending the drawdown period from 30 to 35 years reduces the safe starting rate from 3.9% to 3.5%, a meaningful haircut for someone who may spend three and a half decades in retirement. Retirees willing to adopt flexible spending strategies, such as a “guardrails” approach or a Treasury Inflation-Protected Securities (TIPS) ladder, can push their starting rate as high as 5.7%, according to the same research.

For this particular retiree, given the combination of lingering market volatility, near-term college expenses, and a cautious temperament evidenced by heavy exposure to CDs and cash, a 3% withdrawal rate looks prudent. On a $3.6 million portfolio, 3% translates to $108,000 per year, still a very respectable annual income. Historical simulations consistently show that a 3% rate carries a success rate well above 95% for 30-year retirements, even in adverse market sequences. If annual spending is expected to run well below $108,000, a rate closer to 2.5% remains a sound option. The right number ultimately depends on expected expenses and personal comfort with uncertainty, which is precisely what a fee-only financial advisor can help quantify.

One additional consideration deserves attention: this retiree is just one year away from age 62, the earliest point at which Social Security benefits can be claimed. Claiming at 62 permanently reduces monthly benefits by up to 30% compared to claiming at the full retirement age of 67. In 2026, the maximum Social Security benefit is $2,969 per month for someone claiming at 62, versus $5,181 per month for someone who waits until 70, illustrating just how much lifetime income is left on the table by claiming early. Delaying past 67, and ideally until 70, earns an additional 8% credit for each year of delay. That compounding boost meaningfully increases guaranteed monthly income and reduces dependence on portfolio withdrawals over the long run. For someone with a working spouse providing a financial cushion, delaying Social Security is often the highest-return decision available.

The structural good news is real. The spouse is still working and likely to continue for another 5 to 10 years, providing a financial buffer if markets wobble or college costs exceed projections. That earned income reduces pressure on the portfolio precisely during the years when sequence-of-returns risk is most acute.

The bottom line

A withdrawal rate is not a fixed contract. Adjusting it based on market conditions, expected expenses, and evolving comfort levels is a sound and well-established approach. When stocks are under pressure and tuition bills are coming due, dialing back to 3% or even 2.5% makes sense. Once the portfolio has stabilized and the college years are in the rearview mirror, revisiting a rate closer to 3.5% or 4% is entirely reasonable. Flexibility is the retiree’s most underrated tool, and the couple described here has more of it than most.

Editor’s note: This pass updated the personal savings rate for Q1 2026 from 3.7% to 3.9%, consistent with Bureau of Economic Analysis quarterly data. It also added detail from the Allianz 2026 Annual Retirement Study, including that 48% of Americans have no written financial plan and that 57% feel anxious about retirement accounts when markets drop. A note on Morningstar’s finding that a 35-year drawdown horizon reduces the safe starting rate from 3.9% to 3.5% was added as directly relevant context for a 61-year-old retiree.

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