Retiree’s $920,000 Plan Reaches 95 Only if Social Security COLA Tops 2%

1 articles · Updated · 24/7 Wall St. · May 19

$920,000 in savings plus a $2,800 monthly Social Security benefit can cover a 67-year-old retiree’s $58,000 annual spending with a roughly 3% withdrawal rate, but only if future COLAs preserve enough purchasing power.
2.5% average COLA would lift the benefit to about $66,000 by age 95, while 1.8% would leave it near $54,000—creating a $12,000 annual shortfall the portfolio must absorb.
At a 3.5% yield, about $697,000 must be dedicated to generating the current $24,400 income gap; chasing 8% to 14% yields cuts that capital need but raises the risk of principal erosion.
The report recommends a 24-month cash reserve, possible annuitization with a $150,000 SPIA at ages 75 to 80, a QLAC at 73, and halving withdrawals after any 15% portfolio drop.
Planning to age 95 reflects longevity risk: Social Security Administration tables show a healthy 67-year-old woman has about a 25% chance of reaching 93 and a 10% chance of reaching 96.

Your retirement plan seems safe, but is it built to survive Social Security cuts and persistent inflation?

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