How to Build a Retirement Plan That Actually Fits Your Life
Regardless of how much someone has saved, it’s rare to meet someone who feels completely certain they won’t run out of money in retirement.
We’ve had that conversation with households that have around half a million dollars, and we’ve had it with households closer to $6 million. The question may sound a little different, but it usually comes back to the same thing: “Do we have enough?”
It makes sense. You spend decades learning how to save, and then retirement asks you to start using the money you worked so hard to build. That’s a big shift, and adding up account balances in your head can only tell you so much.
This is where our Director of Financial Planning and Tax Strategy, Taylor Wolverton, gets involved. Taylor oversees the projection process we use with new clients and reviews it with clients throughout retirement. She takes the income, expenses, taxes, required minimum distributions, investment assumptions, and goals that make up someone’s financial life and projects them forward.
To show you what that can uncover, we’ll walk through a hypothetical couple we call Bob and Sally.
What Bob and Sally’s Plan Looked Like
Bob and Sally are in their early seventies. Bob is still drawing a salary, both are collecting Social Security, and between their accounts and real estate, they have close to $6 million.
On paper, that sounds like plenty.
But situations like Bob and Sally’s come up enough that we know a large account balance doesn’t automatically mean someone is sitting down at the table feeling 100% confident about retirement. There’s a difference between knowing how much you have and understanding what those dollars can support over the next 20 or 30 years.
That’s what the projection helps answer.
What the Numbers Showed
Taylor built out Bob and Sally’s income, expenses, required minimum distributions, and other details, then projected everything forward to age 90.
Their income from salary, Social Security, and eventually Bob’s RMDs was outpacing their expenses by around $140,000 a year.
That’s roughly $11,000 to $12,000 each month that wasn’t being spent.
The projection used conservative assumptions, including a 5.5% to 6% average return, 3% inflation, and no cost-of-living increase on Social Security. Even with those assumptions, their account balances were projected to grow past $10 million by age 90.
Now the conversation gets interesting.
Once Bob and Sally could see what their current spending and income looked like over time, there was room to ask a different question: What did they actually want their money to do?
Putting the Plan to Work
If leaving several million dollars to your children is part of your plan, great. You can build around that.
But maybe there’s a European trip you’ve talked about for years. Maybe you want to remodel the kitchen. Maybe helping with a grandchild’s college education would mean a lot to you.
A projection gives you a way to explore those decisions with actual numbers.
Take a $40,000 European trip. Taylor can add that expense to the projection and show what happens to the long-term plan. Maybe the effect is relatively small. From there, you can explore what taking similar trips over the next few years would look like, or how a larger travel budget fits into retirement over time.
The same process works for other goals. You can change an assumption, run the numbers again, and see the effect.
We’ve watched people’s shoulders drop during conversations like this. Seeing the numbers laid out clearly can turn a question that’s been hanging around in the back of your mind into something you can actually evaluate.
Your retirement plan starts becoming much more useful for everyday decisions.
Why Mental Math Only Gets You So Far
After 30 or 40 years of saving for retirement, spending from those accounts in retirement can take some getting used to.
There’s also a practical limitation to trying to figure everything out in your head. A rough estimate may include your account balances and monthly expenses, but retirement planning has more moving parts than that.
A full projection can account for salary, Social Security, investment returns, inflation, required minimum distributions, expenses, and other assumptions over decades.
That gives you something much more useful than a general sense that you’re probably okay.
And sometimes the numbers point in the other direction.
A projection may show that retiring a year or two later could strengthen the plan. Working part time for a while might help. A spending adjustment may give you more room later.
Now you have specific choices to consider and can see how each one affects the long-term picture.
Your Numbers Tell Your Story
Bob and Sally are a hypothetical example, and your retirement probably won’t look exactly like theirs.
You may have more saved or less. Your income sources, spending, taxes, goals, family, and timeline are your own. That’s exactly why the projection is useful.
The question isn’t whether your retirement looks like Bob and Sally’s. It’s whether you know what your current plan supports.
Maybe the numbers show you have room to do something you’ve been putting off. Maybe they identify an adjustment that could strengthen the next 20 or 30 years. Either way, you have something concrete to work with.