SmartAsset Analysis: Can $900,000 IRA Sustain a 75-Year-Old Retiree?

SmartAsset and Yahoo Finance have published an analysis detailing how a 75-year-old retiree with $900,000 in an Individual Retirement Account (IRA) can structure their finances to ensure savings last through their remaining lifespan. The report emphasises the necessity of balancing projected income against expenses while accounting for variables such as market volatility, inflation, and potential long-term care costs.

According to the Social Security Administration, a man aged 75 can expect to live to age 87, while a woman of the same age may live to 89. The article notes that individual life expectancy varies based on health factors, but these averages provide a baseline for calculating whether a nest egg will suffice over a 12-to-14-year horizon.

The analysis evaluates several withdrawal strategies, starting with the traditional 4% rule. Applying this guideline to a $900,000 IRA yields approximately $36,000 annually. However, the report suggests this static approach may be insufficient for many retirees, as it does not account for changing spending needs or the erosion of purchasing power over time.

For greater income stability, the article proposes investing the entire balance in 30-year U.S. Treasury Bonds, which currently yield 4.25%. While this provides steady income, the report warns that bond yields may lag behind inflation. Conversely, a diversified portfolio aiming for a hypothetical 7% annual return could allow for $63,000 in annual withdrawals before taxes.

When combined with the average Social Security benefit of $23,712 per year as of January 2025, the hypothetical total retirement income reaches nearly $87,000. The report highlights that tax planning is critical, noting that up to 85% of Social Security benefits can be taxable depending on combined income thresholds, and IRA withdrawals are subject to standard income tax rates.

The article concludes by recommending that retirees consult a financial advisor to create a comprehensive plan. It suggests using tools such as SmartAsset’s matching service or retirement calculator to assess individual circumstances, manage risk through diversification, and determine if assets should be preserved for a legacy or fully consumed during the retiree’s lifetime.