The Problem With One-Size-Fits-All Rules

Take the idea that you need $1 million to retire. For some, that might be more than enough. For others, it’s not even close. What really matters is how much you plan to spend in retirement and how much of that is covered by fixed income like Social Security or pensions. If you have a $60,000 annual gap between your expenses and guaranteed income, you’d need about $1.5 million saved using the 4% rule. But if your shortfall is smaller, your target savings should be too.

Another common rule spending 80% of your pre-retirement income often misses the mark. Retirees spend differently depending on health, hobbies, and lifestyle. Some may downsize and spend less; others may travel more and spend more. That’s why personalization beats generic benchmarks every time.

Rethinking Investment Allocation

Then there’s the infamous “100 minus your age” rule for stock allocation. Joe Anderson didn’t mince words he called it “the stupidest thing ever.” Why? Because it ignores your risk tolerance, income needs, and financial goals. A 65-year-old planning to leave a legacy may need a different mix than one who just wants steady income.

Instead of formulas, focus on the returns you need to reach your goals and align your portfolio accordingly. That might mean holding more stocks for growth, or more bonds and cash for stability.

Smarter Strategies for Saving and Investing

Joe and Alan recommend the Rule of 25: multiply your annual spending gap (after Social Security and pensions) by 25 to estimate how much you’ll need. They also shared the Rule of 72, which shows how quickly your money doubles based on its growth rate. For example, at 6% annual growth, your portfolio doubles in about 12 years.

When it comes to saving, their hierarchy is straightforward:

1. Contribute to your 401(k) up to the employer match.
2. Prioritize a Roth IRA for tax-free growth.
3. Go back and max out your 401(k).
4. Invest any extra in a brokerage account for flexibility.

Don’t Forget the Basics: Emergency Funds and Insurance

An emergency fund is non-negotiable ideally 3–6 months of expenses, or up to a year if you’re self-employed. And while the “10x your salary” life insurance rule is a good starting point, it doesn’t work for everyone. Your age, dependents, and goals should determine how much coverage you actually need.

Avoid Market Timing

Many investors like the idea of “buying on dips,” but Alan Clopine warned against it. Timing the market is almost impossible to get right consistently. A disciplined, consistent investment strategy is far more effective and less stressful.

The Bottom Line

Rules of thumb may sound convenient, but they rarely work in practice. Retirement planning isn’t about hitting someone else’s magic number it’s about aligning your savings, income, and investments with your personal goals. Whether you want to travel the world, leave a legacy, or simply live comfortably, your plan should reflect you not the average.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

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