Can Michael and Lisa Retire at 65? The Real Math Behind Retirement Readiness

Michael and Lisa are like many couples approaching retirement financially comfortable but uncertain whether their savings will truly last. At 62, they’ve worked hard, saved diligently, and are eager to start enjoying life while they still have their health. The question is: can they afford to retire at 65 and maintain their current lifestyle?

With roughly $2 million in combined savings and nearly $900,000 in home equity, Michael and Lisa appear to be in a strong position. Their monthly expenses total about $14,000 $10,000 for day-to-day living and $4,000 for travel. They envision their first decade of retirement as the “go years,” filled with trips, experiences, and family time. They plan to retire at 65, when they’ll also qualify for Medicare, removing one major financial concern from the equation.

But as every retiree quickly learns, income in retirement doesn’t work like a paycheck. Their current salaries will stop once they leave work, and for the first five years before Social Security kicks in their lifestyle will rely entirely on their portfolio. That’s roughly $252,000 in withdrawals per year during their early retirement years. Once Michael begins collecting $4,000 a month in Social Security at age 70 and Lisa adds $3,900 per month, the pressure on their portfolio will ease dramatically. Still, the math shows their plan, as it stands, has only a 24% probability of long-term success.

So, what can they do to change that outcome? The simplest though not always the most appealing answer is to delay retirement. If they work until 68, their probability of success nearly triples to 65%. That’s because each additional year of work reduces the years they’ll draw down savings, allows investments to grow longer, and boosts their Social Security benefits. However, time is a precious resource, and delaying retirement also means postponing the years when they’re healthiest and most active.

A more balanced solution lies in adjusting their spending patterns, particularly their travel budget. Travel is one of the biggest joys of early retirement but also one of the biggest expenses. By planning to reduce travel spending after the first decade, they can enjoy their most active years without jeopardizing their long-term security. This adjustment alone increases their plan’s probability of success to about 65% — the same effect as delaying retirement, but without sacrificing those early adventures.

Understanding how retirement spending naturally evolves can also make a big difference. Economists call it the “retirement spending smile.” Expenses tend to be highest in the early years when retirees travel and stay active then decline as energy levels and mobility decrease. By assuming a spending growth rate of 2% instead of 3%, Michael and Lisa can significantly stretch their resources while maintaining their desired lifestyle.

Downsizing is another powerful lever. If they sell their $1.1 million home and move into a $700,000 property in their mid-70s, they’ll free up $400,000 in equity money that can be added to their investment portfolio or used to create a more flexible income stream. This move alone could dramatically improve their financial outlook and provide added peace of mind later in life.

In the end, the question isn’t just can Michael and Lisa retire it’s how they should retire. With their savings, Social Security benefits, and a few smart adjustments, the answer is yes, but with boundaries. A well-structured cash flow plan, realistic spending expectations, and a willingness to adapt over time will make the difference between worrying about money and truly enjoying the freedom they’ve worked for.

The lesson for anyone in their early 60s is clear: retirement readiness isn’t defined by a single number, but by how your savings, spending, and lifestyle fit together. The right plan doesn’t just tell you when you can retire it shows you how to make those years the best of your life.

You should always consult a financial, tax, or legal professional familiar about your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. 

Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost.