How to Budget for 30+ Years of Retirement (Without Running Out)

Retirement isn’t a 10-year sprint — it can last 30 years or longer. That means your money must work as hard in your 80s as it did in your 50s. The real risk isn’t market volatility. It’s running out of money while you’re still very much alive.

To avoid that fate, you need more than a rough estimate and hope. You need a strategy built to survive inflation, market cycles, and rising healthcare costs.

Start with a 30-year game plan

A sustainable retirement begins with realistic projections. The widely cited 4% rule suggests withdrawing 4% of your total savings in year one, then adjusting that amount annually for inflation. Historically, this approach has supported a 30-year retirement across various market environments.

But a withdrawal strategy is only part of the equation. You must also:

• Create a retirement-specific budget: Work-related expenses disappear, but costs from travel, hobbies, and healthcare often rise.
• Reduce or eliminate debt before retiring: Entering retirement mortgage-free dramatically lowers fixed costs.
• Plan for inflation: Even at 2–3%, your purchasing power can be cut nearly in half over 25–30 years.
• Maximize government benefits: Delaying Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) and Old Age Security (OAS) can significantly increase guaranteed lifetime income.

Retirement budgeting is dynamic. Review your numbers annually to adjust for portfolio performance, spending changes, and unexpected expenses.

Build income that grows

If your withdrawals rise with inflation, your income must grow too. That’s why many successful retirees focus on dividends and distribution-paying investments with built-in growth.

One example is Brookfield Infrastructure Partners L.P. (TSX:BIP.UN). The partnership currently offers a distribution yield around 4.7% — already above the 4% withdrawal guideline. More importantly, it has increased its distribution for 18 consecutive years, with management targeting at least 5% annual growth.

Its portfolio spans utilities, transport, midstream energy, and a rapidly expanding data infrastructure portfolio. Eight five percent of its funds from operations (FFO) is contracted or regulated, often with inflation-linked pricing. That structure provides built-in protection against rising costs.

In its data segment alone, FFO jumped 50% last year following investments such as a U.S. bulk fibre network. With 1.2 gigawatts (GW) of operating capacity, a 1.1 GW contracted project backlog, and 1.3 GW of land bank, the segment adds a layer of growth that complements its defensive assets.

The result? A business model designed to produce steady, rising income across economic cycles — exactly what retirees need.

Protect against the unexpected

Even the best plan needs shock absorbers.

Maintain a cash reserve or emergency fund to cover unexpected expenses. This prevents you from selling investments during market downturns. A good rule of thumb is one to two years of planned withdrawals in low-risk, liquid assets.

Use retirement calculators to test scenarios — including lower market returns or higher healthcare costs. And consider consulting a fee-for-service financial planner for a personalized strategy.

Downsizing is another powerful lever. Selling a larger home can unlock capital, reduce maintenance costs, and simplify life.

Investor takeaway

Budgeting for a 30-plus year retirement requires more than a withdrawal formula. It demands disciplined spending, inflation awareness, government benefit optimization, and — most importantly — income that grows over time.

By reducing debt, building a diversified income-producing portfolio, maintaining emergency reserves, and reviewing your plan annually, you dramatically improve your odds of never running out of money. Retirement isn’t about guessing. It’s about designing income that lasts as long as you do or longer.

The post How to Budget for 30+ Years of Retirement (Without Running Out) appeared first on The Motley Fool Canada.

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Fool contributor Kay Ng has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.