So how do you plan for a successful retirement without over- or under-shooting? Here’s a breakdown of how to find your number, manage the tradeoffs, and build a plan that lets you live comfortably—now and later.

1. Save Enough, But Not Too Much

The goal of saving for retirement is to ensure future security, but once you’ve reached a point of stability, saving more than you need can actually cost you valuable time and experiences.

Under-saving may lead to financial hardship in your 70s, 80s, or 90s. Over-saving may keep you working longer than necessary, with extra funds that don’t meaningfully improve your retirement lifestyle.

The sweet spot is somewhere in between—enough to fund the retirement you want, not so much that you delay living your life today.

2. Use This Simple Formula to Find Your Retirement Target

Let’s say you want to spend $6,000 a month in retirement and expect $2,000 per month from Social Security. That leaves a $4,000 monthly gap, or $48,000 annually, that needs to come from your savings.

Adjusting for 10 years of inflation (at 3%), that becomes about $64,500 per year.

Using the 4% withdrawal rule, you’d need a retirement portfolio of: $64,500 ÷ 0.04 = $1.612 million

That’s your target to generate sustainable income over a 30-year retirement.

3. Growth Assumptions and the Savings Gap

Now let’s say you already have $750,000 saved and you’re expecting a 6% annual growth rate. Over 10 years, your portfolio might grow to $1.3 million—a solid amount, but still $270,000 short of your goal.

Depending on your time frame and assumptions, this gap may be manageable. For example:

• Starting with $500,000? You might need to save $4,500/month.
• Starting with $1.2 million? You might not need to save anything more.

4. Don’t Forget Taxes

The type of accounts you withdraw from in retirement matters—a lot.

Let’s look at Tina, who needs $84,000/year after taxes. If her money is in a traditional IRA, she might need to withdraw $117,000/year to net that amount—thanks to income taxes.

That’s a 7.3% withdrawal rate, which would deplete her portfolio by age 82.

But if the funds were in a Roth IRA, those withdrawals would be tax-free. Tina’s portfolio could last until age 90, just by avoiding taxes. This is why tax efficiency is a critical part of retirement planning.

5. Plan for Uneven Spending in Retirement

Retirement isn’t a straight line. Most people spend more early on—traveling, renovating homes, or helping with grandchildren—then slow down later.

Tina, for instance, spends $10,000/month in her first five years of retirement, including $3,000 on travel. After that, her spending drops to $7,000/month. This change alone improves her financial outlook dramatically.

Being realistic about your spending phases can make your retirement plan more accurate and sustainable.

6. The Retirement Spending Smile

This concept, supported by retirement research, shows that retirees often decrease spending over time. Instead of increasing expenses with inflation every year, you might reduce spending naturally during the “slow-go” and “no-go” years.

Adjusting Tina’s spending growth from 3% to just 2% annually improved her success probability from 63% to 84%.

Lesson? You don’t always need to plan for increasing costs. Sometimes, less is more.

7. Life Expectancy Matters More Than You Think

Life expectancy assumptions dramatically affect how much you need to save.

If Tina plans for a 100-year life, her success rate drops. If she only expects to live to 80, her odds jump to 99%. That’s a wide range, and while no one can predict the future, it’s important to plan for longevity—especially with improved healthcare and longer average lifespans.

8. Work Longer—or Adjust Spending

If Tina continues working until age 68 or 69 and continues saving, her chances of success rise significantly. But interestingly, adjusting her spending in the early years of retirement can offer a similar boost—without the extra years of work.

This is where a detailed, personalized retirement plan makes all the difference. The right choices—like reducing early travel or adjusting inflation assumptions—can help you retire sooner without giving up your lifestyle.

The Bottom Line

Retirement planning isn’t just about hitting a number. It’s about building a plan that supports both your future security and your present happiness.

Start with a realistic estimate of how much you’ll need. Factor in inflation, taxes, and life expectancy. And most importantly—design your retirement around your life, not just your finances.

A smart retirement plan allows you to enjoy your time, stay healthy, and leave worry behind—exactly what this next chapter of life should be about.

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.

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