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 is one of the top fears of soon-to-be retirees, and for good reason. It is one of the nastiest wake-up calls anyone can receive. Returning to work after savoring the first few years of freedom is painful, and re-entering the workforce rarely means landing the same salary. There is also no guarantee that someone can perform their previous role effectively later in life.

The fear runs surprisingly deep. 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 2025 Annual Retirement Study from the Allianz Center for the Future of Retirement put the anxiety in even starker terms: nearly two in three Americans (64%) worried more about running out of money than about death itself. By the time Allianz published its 2026 edition in April of this year, that share had climbed to 67%, a 10-point jump from 57% in 2022, suggesting the fear is intensifying rather than fading. The generational spread is striking: Gen Xers registered the highest concern at 73%, followed by millennials at 69% and baby boomers at 59%.

This anxiety is not limited to those who are financially stretched. High-net-worth individuals, even those with everything seemingly in order, share the same unease. Emergency healthcare costs or a sharp stock 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 in retirement can limit growth, but the key benefit is having 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 heavy in stocks that it introduces dangerous volatility.

Market crashes and corrections happen. With the stock market rattled by tariff uncertainty in recent years, many stock-heavy retirees have already gotten the message: fasten the seatbelt or rebalance to reduce portfolio volatility.

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), ample assets spread across other tax-advantaged accounts, and a considerable sum sitting in cash and Certificates of Deposit (CDs). In short, the portfolio is well constructed and carries strong liquidity. On the surface, this person looks 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 becomes even stronger. The risk of running out of money is low, unless the couple plans a significant lifestyle upgrade after retirement.

One complicating factor is hefty college expenses on the horizon for their child. College bills can 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 $31,000 at an in-state public school and $65,000 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 gap if their 529 plan falls short.

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 essence of sequence-of-returns risk: poor returns in the early years of retirement, combined with ongoing withdrawals, can permanently impair a portfolio even if markets recover later.

With large college expenses ahead and an understandable 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’s 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 standard.

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 30% to 50%. It is also up from 3.7% in the prior year’s research, reflecting improved return expectations across asset classes. Notably, Morningstar uses forward-looking return assumptions rather than purely historical data, which is why the figure shifts from year to year as the return outlook changes.

For this retiree, given the combination of stock 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 poor market-return sequences.

If annual spending is expected to run well below $108,000, a rate closer to 2.5% remains a reasonable 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: 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. Delaying past 67, and ideally waiting 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 haul. For someone with a working spouse providing a financial cushion, delaying Social Security is often the highest-return “investment” available.

The structural good news is real. The spouse is still working and likely to continue for another 5 to 10 years, which provides a financial safety net if markets wobble or college costs exceed projections. That earned income serves as a buffer, reducing pressure on the portfolio during the years when sequence-of-returns risk is at its highest.

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 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 have passed, revisiting a rate closer to 3.5% or 4% is entirely reasonable. Flexibility is the retiree’s most underrated tool.

Editor’s note: This article was updated to include the generational breakdown from the Allianz 2026 Annual Retirement Study (Gen Xers at 73%, millennials at 69%, and boomers at 59% fearing outliving savings more than death), a note that Morningstar’s safe withdrawal rate research uses forward-looking rather than purely historical return assumptions, and College Board total cost-of-attendance figures that go beyond tuition-only numbers to reflect the full financial burden of a four-year degree.

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