“Can I retire?” is really three questions. What will you spend? What comes in no matter what?
And how much do your savings have to cover, for how long? The answer is rarely a clean yes or no. Usually it’s “yes, if,” and the “if” is where planning pays for itself.
The basic math
| Per year | |
|---|---|
| Spending, including taxes | $110,000 |
| Pension | $38,000 |
| Social Security (one spouse now, one later) | $30,000 |
| Gap savings must cover | $42,000 |
| Savings | $1,200,000 |
| Withdrawal rate | About 3.5% |
This household looks ready on paper, if spending is accurate, health insurance until 65 is covered, and they can tolerate a weak market in the first few years. The numbers are hypothetical. Yours are the ones that count.
The checklist
Six questions before you retire
0 of 6 done
Spending Know the number
Income What’s guaranteed
Protection What could go wrong
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- Savings must cover each year
- $42,000
- Versus the 3% to 4% range
- Within it
- Savings last until
- Past 100
Social Security timing
Full retirement age is 67 for anyone born in 1960 or later.
You can claim as early as 62 with a permanent reduction, or wait until 70 and earn roughly 8% more for each year past full retirement age. For married couples, the higher earner’s claiming age also sets the survivor benefit, which is often the strongest reason to wait.
Bridging to 65
- Medicare generally starts at 65. Before that, you need retiree coverage, a spouse’s plan, COBRA or a marketplace plan.
- Marketplace subsidies depend on income, so how you draw from savings in those years can change your premium.
- Years between retirement and Social Security or required withdrawals can be a good time for Roth conversions at low tax rates.
The risks a plan has to handle
A bad first few years
Selling investments after a drop early in retirement does lasting damage. Keep a few years of spending in safer assets.
Living a long time
Plan to 95 for at least one spouse. Guaranteed income helps here.
Inflation
A fixed pension buys less each year. Part of your savings has to grow.
Health and care costs
Medicare doesn’t cover long-term care. Decide how you’d pay for it.
How Morrowgate helps. Greg builds the full picture: real spending, every income source for both of you, the withdrawal plan, Social Security timing, health insurance before 65 and taxes. Then he shows whether this year works, and what would make it work. Accounts are held in your name at Fidelity, with Schwab available.
Questions people ask
How much do I need to retire?
Start with the gap between your spending and your guaranteed income. Many planners treat 25 to 30 times that annual gap as a rough savings target, which corresponds to a 3.3% to 4% withdrawal rate.
Is the 4% rule still valid?
It’s a reasonable starting point from historical research, not a guarantee. Flexible spending, guaranteed income and a cash cushion matter as much as the rate.
Should I take Social Security at 62?
Sometimes, for health or cash-flow reasons. For many married higher earners, waiting raises both their benefit and their spouse’s survivor benefit.
What if I retire before 65?
You’ll need health insurance until Medicare. Plan the cost and how your withdrawals affect any marketplace subsidy.
Where this guidance stops
This article is general education on retirement readiness: how the rules and the options generally work.
It is not tax, legal or investment advice, and nothing here is a recommendation for your situation. Rules change and outcomes turn on the facts, which is why a CPA and an attorney look at a family’s own numbers before anything is done.
Sources
- Social Security Administration: Retirement benefits and full retirement age
- Social Security Administration: Delayed retirement credits
- Medicare.gov: Getting started with Medicare
- IRS: Required minimum distributions