If you've spent any time researching retirement, you've probably seen a number. A million dollars. Two million. The old rule that says you need 80% of your pre-retirement income. Maybe you've run a calculator that spat out a figure so large it made you close the browser.
Here's the truth: there’s no universal number. The right answer is yours specifically, not a headline figure designed to sell you something.
The number you need is determined by the life you plan to live. Not the life someone else assumes you'll live.
So, let's work through what actually matters.
Start with what you'll spend, not what you've saved
Most retirement planning starts with a savings balance. It should start somewhere else: your expected monthly expenses in retirement.
Think through it honestly. Housing (will the mortgage be paid off?). Healthcare, which tends to rise with age and is often the biggest wildcard. Travel, if that's part of the plan. Helping kids or grandkids. The things you've been putting off that retirement is actually for.
A common estimate is that retirement spending accounts for 70% to 90% of pre-retirement income. But that range is wide for a reason. Someone with a paid-off home who plans to stay local might need far less. Someone with ongoing health costs or a taste for travel might need more. Get honest about your number before you try to hit it.
The 4% Rule: Useful, not gospel
You may have heard of the 4% rule. If you withdraw 4% of your portfolio in the first year of retirement and adjust for inflation each year after, historically, your money has had a strong chance of lasting 30 years.
So, if you need $60,000 a year from your portfolio, the math points to $1.5 million. Need $80,000? You're looking at $2 million.
It's a reasonable starting point. But your situation may differ in ways that matter. How early you retire. Whether you have a pension or rental income. How much risk you're comfortable carrying as markets move. Use it as a reference, not a verdict.
Don't forget what's already coming in
Your savings aren’t the only thing funding retirement. Most people have income sources that reduce how much their portfolio needs to cover.
- Social Security. Your benefit depends on your earnings history and when you claim. Claiming at 62 versus 70 can mean a difference of 70% or more in your monthly check. That decision alone is worth thinking through carefully.
- Pension income, if you have it. Still relevant for many in the public sector or long-tenure roles.
- Part-time work in early retirement. Even modest income in the first few years can reduce the draw on your savings and give your portfolio more room to grow.
- Rental or other passive income, if applicable.
The gap between your expected expenses and these income sources is what your savings actually need to cover. For some people, that gap is large. For others, it's smaller than they assumed.
The years you're in right now matter a lot
Your late 40s and 50s are often the highest-earning window of a career. The compounding that happens here is significant. So is the opportunity to take advantage of catch-up contributions to your 401(k) and IRA if you haven't already.
It's also a good time to stress-test your assumptions. What if retirement comes earlier than planned, through a health issue or a job change? What does your plan look like at 62 versus 67? These aren't comfortable questions, but they're the useful ones.
The goal isn't a number. It's a plan that holds up when things don't go exactly as expected.
There's no perfect answer, but there is a better one
Retirement planning isn't something you solve once. It's a set of decisions you revisit as your life changes. The goal right now is to get clear on your expected expenses, understand what income is already coming in, know what gap your savings needs to cover, and have a plan flexible enough to handle the unpredictable.
That's more than most people have. And it's enough to move forward with.
If you'd like to work through the specifics of your situation, our Wealth Advisors are available for a no-pressure conversation.
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