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If you need to withdraw $10,000 each month from a $1 million portfolio, that’s a 12% annual withdrawal rate. Sustaining this rate over a long retirement could increase the risk of depleting your savings. However, the gap between your spending goal and what your portfolio can support isn’t necessarily a dead end. Other income sources, a different withdrawal strategy and adjusting your timeline could help you make the math work.
Why a 12% Withdrawal Rate Can Fall Short Over Time
Withdrawing $10,000 per month from a $1 million portfolio could deplete your nest egg within 15 to 20 years. Here’s what can happen in the first five years:
| Year | Portfolio Balance | Annual Withdrawal (12%) |
|---|---|---|
| 1 | $1,000,000 | $1,000,000 × 12% = $120,000 |
| 2 | $880,000 | $880,000 × 12% = $105,600 |
| 3 | $774,400 | $774,400 × 12% = $92,928 |
| 4 | $681,472 | $681,472 × 12% = $81,777 |
| 5 | $599,695 | $599,695 × 12% = $71,963 |
By the fifth year, your portfolio has shrunk by about 40% to $599,695 and your monthly spending gap is approximately $4,003.You should also note that the example in the table does not adjust for inflation, so the real gap between your spending needs and available funds can grow even faster.
Retirees typically follow a 4% withdrawal rate as an annual benchmark. The Chicago-based research firm Morningstar recommends 3.9% for inflation-adjusted spending over a 30-year retirement. 1 At this rate, here’s what your $1 million portfolio could provide over five years:
| Year | Portfolio Balance | Annual Withdrawal (3.9%) |
|---|---|---|
| 1 | $1,000,000 | $1,000,000 × 3.9% = $39,000 |
| 2 | $1,009,050 | $1,009,050 × 3.9% = $39,353 |
| 3 | $1,018,182 | $1,018,182 × 3.9% = $39,709 |
| 4 | $1,027,396 | $1,027,396 × 3.9% = $40,068 |
| 5 | $1,036,694 | $1,036,694 × 3.9% = $40,431 |
At 3.9%, your portfolio would grow to approximately $1.037 million over the same period, while monthly income rises from $3,250 to roughly $3,369. At 12%, the balance falls from $1 million to $599,695 in five years, leaving a shortfall of about $4,003 per month by the end of that period.
By lowering your withdrawal rate to 3.9%, you can maintain a stable income stream that could allow your portfolio to continue growing if investment returns exceed withdrawals. You will, however, need to supplement that income or cut your spending.
A financial advisor can help you model a combination of income sources and spending adjustments for your income goals.
One Way to Help Close Part of the Gap
The average monthly Social Security benefit for a retired worker in June 2026 is $2,084.40. 2 Adding this amount to your portfolio withdrawal would cut your monthly gap by approximately 31%.
| Income Source | Monthly Amount |
|---|---|
| Portfolio withdrawal (3.9%) | $3,250 |
| Social Security (average) | $2,084 |
| Combined monthly income | $5,334 |
| Your spending goal | $10,000 |
| Remaining gap | $4,666 |
Delaying your benefits until age 70 could add another 8% to your monthly payment for each year after your full retirement age (FRA). 3 If your benefit at FRA is $2,084 and your FRA is 67, waiting three years would increase your benefit by 24%, raising it to approximately $2,584 monthly.
| Benefit Scenario | Monthly Amount |
| Benefit at full retirement age (67) | $2,084 |
| Delay until age 70 (+24%) | $2,084 × 1.24 = $2,584 |
| Portfolio withdrawal (3.9%) | $3,250 |
| Combined monthly income at 70 | $5,834 |
| Your spending goal | $10,000 |
| Remaining gap | $4,166 |
This would add $500 more each month, and combined with part-time work or spending adjustments, this strategy could make a $10,000 monthly goal more achievable.
How to Make Your Nest Egg More Sustainable
With a $6,750 monthly shortfall, cutting expenses becomes a priority. Reducing your monthly spending by $1,000 would lower the gap to $5,750, while a $1,500 cut would bring it down to $5,250. After adding $2,084 in Social Security benefits, those shortfalls would go down to $3,666 and $3,166, respectively.
Another way to close the gap would be to raise your withdrawal rate slightly, but this would come at the expense of depleting your nest egg faster. Looking for other income sources, such as annuities or CD and bond ladders, could provide additional support. Part-time work could also help cover the remaining amount without increasing withdrawals further.
A financial advisor can help you evaluate spending adjustments, withdrawal rates and additional income sources for your retirement.
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Article Sources
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- Morningstar, “The State of Retirement Income for 2026,” https://www.morningstar.com/business/insights/research/the-state-of-retirement-income.
- Social Security Administration, “Monthly Benefit Snapshot,” June 2026, https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/.
- Social Security Administration, “Delayed Retirement Credits,” https://www.ssa.gov/benefits/retirement/planner/1960-delay.html.