Educational information, not individual financial advice.
Key Takeaways
Retirement planning is a matching problem: on one side, your spending needs over a horizon of potentially 30+ years; on the other, a portfolio and income streams that must cover those needs. Get the match right and retirement works. Get it wrong and you either run out of money or unnecessarily deprive yourself during the best-financed years of your life.
Your required portfolio at retirement, in round numbers:
Portfolio needed ≈ (annual spending − guaranteed income) × withdrawal multiplier
Where:
Example: you expect $80,000/year in spending. You'll receive $30,000/year from Social Security. Net portfolio need: $50,000. Required portfolio: $50,000 × 25 = $1,250,000.
This framework has limits — it assumes spending is constant in real terms, doesn't capture big one-time expenses, and glosses over sequence risk — but it's a useful starting point.
Your ability to hit the retirement target depends on three things:
Savings rate. The percentage of income you save each year. A savings rate of 10% requires roughly 42 years to retire independent of any other factor; 25% requires ~30 years; 50% requires ~15 years. This relationship is remarkably consistent across income levels.
Investment returns. Typical assumed real return for retirement portfolios is 5–7% per year. Below 4% real, plans fail more often; above 8% is ambitious for most diversified allocations.
Time. The earlier you start, the more compounding does the work. Delaying savings by 10 years typically requires doubling your savings rate to hit the same target.
A useful mental model (from Vicki Robin and later popularized by Mr. Money Mustache):
| Savings rate | Years to retirement |
|---|---|
| 5% | ~66 |
| 10% | ~51 |
| 15% | ~43 |
| 20% | ~37 |
| 25% | ~32 |
| 30% | ~28 |
| 40% | ~22 |
| 50% | ~17 |
| 65% | ~10.5 |
Assumes 5% real return and spending that stays constant. These are approximations; reality varies with sequence of returns and lifestyle inflation.
The non-linearity is striking. Moving from 15% savings to 25% cuts the required working years by over a decade. Lifestyle spending restraint has outsized impact because it simultaneously raises savings and reduces retirement spending needs.
The reasons retirement plans fail:
Longevity risk. Living longer than planned. A 65-year-old couple has a roughly 50% chance one of them will live past 90. Planning for only 20 years underfunds the tail.
Sequence of returns risk. A bad market in the first few years of retirement can permanently damage a plan. The same average return delivered in reverse order (great early, bad late) causes no harm. Sequence matters because you're now withdrawing, not accumulating.
Inflation risk. A 3% inflation rate halves purchasing power over 24 years. Fixed-nominal income streams (older pensions, certain annuities) lose real value over time.
Healthcare risk. Out-of-pocket healthcare costs in retirement are estimated at $300,000+ per couple, with long-term care adding potentially much more. Medicare covers a lot but not everything.
Good retirement planning addresses each of these directly — more conservative allocation approaching retirement, inflation-adjusted Social Security as longevity hedge, HSA for healthcare, and Medigap or LTC insurance.
The financial math is only half of it. Many retirees discover that the psychological adjustment is harder than the financial one. Work provides structure, social connection, identity, and purpose — all of which need replacement. The best-prepared retirees think about this explicitly in the year or two before their last working day.
Your Retirement page shows your projected portfolio at retirement, your projected spending, and your Retirement Readiness score based on Monte Carlo simulation. The readiness score weighs the core financial risks — funded ratio, withdrawal rate, risk resilience, income replacement, and income gap coverage — to produce a single 0–100 grade of plan robustness.
A rough target for the portfolio you'll need at retirement is about…
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