How Much Do I Need To Retire or What’s MY Number? Part 5
Who can tell me how much money I need to retire? The question everybody wants an answer to!
How much do I need to retire, Part 5
We’ve spent a lot of time discussing considerations for developing YOUR financial plan. This economic plan is custom-designed BY YOU, FOR YOU and your family. As you know, there is a lot of clickbait out there with someone telling you how much money you need to retire or how much money you should have at a certain age. Like you, I sometimes visit these sites or read numerous articles on the subject. While I think this information CAN be informative, there are just too many variables to state a figure that applies to you. Your situation, your wants, and your needs are unique to you, and your financial plan should be the same.
Why I don’t like generalizations
So, at Afterburner Success Partners, we will never tell you that you should have this much saved for retirement or this amount by such-and-such an age. I will provide you with as much information as possible, then suggest that you meet with your financial advisor to determine a number that works for you and is tailored to your situation. This aspect of being tempered to your situation is one of the reasons that generalizations about how much money you should have saved are misleading. Many of the figures you will see stated at these sites are for people who are likely not like you. I think you know what I mean by that, and like a lot of advertising, it shows the beautiful people who don’t always look, act, or live like us. Let’s worry about you and, as I like to say, “We take you where you are.”
A couple of last comments about these generalizations. You are continually bombarded by clickbait, ads in newspapers, magazines, through the mail, and other forms of advertising that state you should have a certain amount at retirement or by a certain age. The first comment is that, besides being misleading as I mentioned above, it can cause you to be depressed to the point you think you can’t get there, or even worse, that you need less than you think you need. If you will just trust these folks and invest your money with them. They do not have your best interests in mind. The second comment is that you could have a false sense of security as you listen to the pitch about how easy it is. Perhaps not everything has been taken into consideration. Remember, as you read my writings, I’m not asking you for your money. Well, unless you want to take the very low-priced course or buy an inexpensive book. Remember that I’m doing this as a service during the Fall season of my life, not to get rich. The methods I’m advocating are the same ones I used myself over many years. Your financial advisor, assuming they are a fiduciary, has your best interest at heart and will likely have a long-term relationship with you.
In this post, I’m going to go over several additional items you should consider as you prepare to develop “YOUR Number,” enjoy the ride (your daily life), and, ideally, achieve your dreams and live your best life. I recommend printing this post or otherwise writing the information down, and taking it slow and easy over several days. Use your quiet time to pray about it, sleep on it, and ensure you have tempered it to your situation.
Remember that when you develop “YOUR Number”, it’s never final. If you need to make changes after considering what you have written down, that’s perfectly fine and quite normal. Setting unrealistic goals is a recipe for failure and disappointment. After we complete this exercise this week, we will have an extensive review session next week that should prepare you to develop “YOUR Number” and complete your financial template. We will cover this in two posts, starting with this one. Following the advice I offer here will help ensure you are on track to retire well and address your financial concerns as you progress. How exciting!
Additional considerations, or “things to think about”
This is quite a long list, but as I considered what I could remove to keep the post to a reasonable length, I found that there is nothing I would want to leave off. So, it’s an extensive list. Let’s dig in:
Your savings in retirement: Will you spend your savings down in a logical manner, or live off the earnings? Let me just say it is desirable to live off the earnings if you can. There are a couple of terms to mention here, and that’s all I’m going to do is mention them at this point. Sequence of returns. You need to know this term, so please look it up and ensure you have a clear understanding of it. The second is a little ditty that goes like this: “Are you eating chickens or eggs?” Consider it like this: Chickens (your principal or the money you have accumulated at retirement) produce dividends (investment returns, or eggs). My desire is for you to eat eggs and not kill the chickens to survive. I refer you back to the term sequence of returns to understand why. However, many people don’t have this luxury and must eat the chickens. This can be acceptable, but to me, it is not preferred. In fact, this withdrawal formula is where the 4% rule originated and is widely used as a guide in retirement planning (Note 2). That said, a significant market correction early in your retirement highlights the importance of being prepared in a rather ugly manner.
Annual Income: Can you satisfy all your wants and needs today with your current income? Will you be able to fund your retirement, starting today, should you need to?
At what age do you want to retire? Some people never think about this until just before they decide they want to retire. Or are forced into retirement by poor health, being laid off, or otherwise ending their working career. At that point, there may be no choice but to work longer, if they can, perhaps in a capacity they don’t desire that pays less than they are making. Remember, I previously wrote that many people, approximately 40%, are forced into retirement before they are ready (Note 3). Planning sooner is better.
What is your appetite for investment risk? Typically, higher-risk investments provide a higher return. Sometimes they don’t. You must be very careful. I had a friend once who was so risk-averse that all his retirement savings were in money market and CD accounts. He missed out on numerous opportunities for growth over the years. It’s quite possible this strategy could not even keep up with inflation, with the net income actually being a loss!
Investment returns: Similar to investment risk appetite, the returns on our investments will significantly impact our financial future. It’s likely that once you get to retirement, you will need to become more conservative to protect against large market drops in early retirement. This can really hurt you, and that hurt can last a lifetime. I could mention and discuss investments in private equity, assuming you are a qualified investor. Look both of these terms up. Just be cautious, as once you venture into private equity, it may prove challenging for you. President Trump has made 401(k) investments in private equity acceptable as part of the One Big Beautiful Bill, and you are likely to see efforts to encourage you to invest your 401(k) or IRA in it. I’ve done the research, so I’ll say be very careful and FULLY understand what you are getting into.
What debt do you have currently, and will you have in retirement? Mortgage, car loans, credit card, or even student loan debt.
What is your life expectancy? This is a tough one; essentially, you must plan on having a long life, potentially 30 years beyond retirement (remember the 4% rule?). The answer to this question potentially affects when you decide to retire and begin receiving Social Security benefits. Click on the link in Note 1 for a cool little calculator. I could dedicate a lot of words to when to take Social Security, and I believe most people really don’t know what is right for them, other than that, there is a lot of advice about it. For an interesting read, see the October 6, 2025, Wall Street Journal article, in the Investing Monthly section, entitled “Maybe It Doesn’t Make Sense to Delay Claiming Social Security After All.” This is what I’ve been saying for a long time, and at least now it’s being discussed, so I don’t feel so out in right field on the topic. That same issue has a huge article on Private Equity for the common man (person), so if you can get your hands on that issue, there is a lot of really good information in it.
What are current and future federal, state, and local taxes? As I mentioned in a previous post, taxes where you live, or plan to live in retirement, are and can be a big deal. Taxes often fly under the radar, that is, go unseen or unnoticed. There are strategies you can use to minimize your taxes that are perfectly legal and part of the tax code. Best to pay your share, but not a bit more. As I write this, there are a lot of people who are actually moving to different states to reduce taxes and protect their assets. Not just Americans. The wealthy are fleeing the UK as they face economic challenges and attempt to raise taxes on those with substantial wealth. One of the more popular destinations to relocate to for financial protection is Italy. Milan in particular.
Health Savings Account: Do you have an HSA? Check with your employer, as this is one of the best bargains around and can result in not only deferred income taxes but no income tax!
What is currently, and what will inflation do? It’s a huge question, and we have to plan accordingly.
What is the risk to Social Security? Could SSA fail or provide a reduced payout in the future? None of us knows, and it’s part of our long-range planning to assume it could fail or suffer reduced benefits; therefore, we need to plan accordingly.
Travel and Leisure: Do you enjoy traveling? Do you have expensive leisure habits? If so, then you will need to plan for them. If you like to stay home to garden and read, then you won’t need as much money now or in retirement. I can tell you from personal experience that near-retirement expenses can be higher than anticipated, especially if you enjoy foreign travel. Plan accordingly!
College for Children: Do you plan on paying for your children’s college? Are you considering a 529 plan? Please note that many of your assets are taken into consideration when you apply for student loans via the FAFSA. Sometimes it’s prudent to be “poor”, at least on paper, when it comes to college loans. Of course, the best financial aid is an academic scholarship. Receiving an academic scholarship takes a lot of work that often pays off big throughout life, so consider this if you have young children.
Medical costs: In life and retirement, these can be huge expenses, and we’ve previously discussed them. In particular, if something happens to you that causes you not to be able to work, you are forced into early retirement. You are aware of short and long-term disability insurance, aren’t you? Typically, these insurance policies are available through your workplace for a very reasonable amount and can be a lifesaver if you are injured or become ill.
Disaster preparedness: This typically means you are adequately insured and insurance comes in different forms, such as life, disability, long-term care, etc. Now, I would advise against becoming insurance poor, but managing risk is important to your financial future. For example, one question is whether you should purchase long-term care insurance when you are older. Well, there is a lot to think about here, and one option may be to self-insure. This includes balancing the amount of money you have, the likelihood of needing such care, and the typical duration of a long-term stay. Yes, it's a lot to consider and a significant, emotional decision.
Leaving a legacy: We all want to be remembered after we are gone. In financial terms, this is one of the reasons you consider whether you will spend your investment down or live off returns. Would you like to sponsor a scholarship at your local college? Give a gift to a charitable cause? Leave money to your children? Yes, all of these are good ideas that require careful consideration in advance.
When is enough, enough: And this is the final consideration. At some point, I hope you will have accumulated enough to decide to retire from the daily work world, on your terms. I advocate retiring from full-time work sooner rather than later. I’ve found that I can do things that are important to me that I never could have done during my working years. Like volunteer, teach, write books, and start a website and a weekly blog! This is why starting to plan your financial life early is helpful. It gives you choices!
Etcetera
I just learned that the One Big Beautiful Bill contains a change in the 401(k) catch-up provision for high earners beginning in 2026. If you are earning over approximately $145,000 per year, you may want to review this and ensure you are fully funding this provision this year if it is something that interests you.
Summary
You have a lot to consider as you plan your financial future, and you want to start early in your life, like say your 20s. By now, you should have all the information you need to develop your financial Plan! Or at least enough to be reasonably informed when you meet with your advisor. Next week, we’ll take a pause to review, and the following week, we’ll see if you have developed YOUR Number! After that, I’ll discuss what to do if you find yourself stuck or unable to complete your financial plan. Getting stuck is not all that unusual, so if you find yourself stuck, DON’T GIVE UP! Remember that a good financial advisor, as well as an accountant/tax professional, is your friend and partner in this journey. Unless you have educated yourself thoroughly, you will need help.
That’s it for this week!
What’s in it for me?
We all want financial security, don’t we? We’ve spent a considerable amount of time examining various aspects that contribute to successful financial planning. Time to get after it!
Call to Action
Review the previous post on How much you need to retire, as well as posts on templates, if necessary. Hopefully, you have begun to think about how you want your final financial template to look and are getting a general idea of what “Your Number” should be. That’s a lot, but now is a great time to ensure you are up to speed so you can benefit from all of these posts.
Recommended Resources
In addition to the references in the notes, I recommend consulting with your financial advisor and/or accountant/tax professional as soon as possible to initiate these discussions. If you don’t have a financial advisor or tax professional, then figure out how to find one you trust. Talking to trusted friends is a good place to start, but I would advise doing your own research and interviewing potential individuals you want to entrust with your financial future until find someone you trust..
Up Next
Review time 6!
Notes
Please note that as an Amazon Affiliate, I may earn a small commission on the sale of any of these recommended resources.
Life Expectancy Calculator, Social Security Administration: https://www.ssa.gov/oact/population/longevity.html
Spending in Retirement: Beyond the 4% Rule: https://www.schwab.com/learn/story/beyond-4-rule-how-much-can-you-spend-retirement
More Americans Are Forced to Retire Early-And Are Unprepared For The Long Haul: https://finance.yahoo.com/news/more-americans-are-forced-to-retire-early--and-are-unprepared-for-the-long-haul-124815118.html