There’s no shortage of retirement rules of thumb out there. Save ten times your salary. Replace eighty or ninety percent of your pre-retirement income. Hit a million dollars, or two million, before you even think about stopping work.
These benchmarks get repeated so often they start to feel authoritative. They’re not. At best, they’re rough starting points. At worst, they send people chasing a number that has nothing to do with the life they actually want to live.
The question worth asking isn’t “Do I have enough?” in the abstract. It’s “Do I have enough to fund this specific retirement, for this specific person, with these specific plans and values and habits?” That’s a harder question - but it’s also the only one with a useful answer.
The Variable Nobody Nails Down
When we sit down with someone approaching retirement, many of the major inputs are either known or reasonably estimable.
Social Security income? Known. Account balances? Known. Conservative assumptions about investment returns? Knowable. Healthcare costs in the early retirement years? Estimable, with some homework.
The variable that changes everything - and the one many people haven’t honestly nailed down - is spending.
How much do you actually need to live the retirement you want? Not the lean version, not the fantasy version. The real one.
It sounds like a simple question. It rarely is. Spending is deeply personal, and many people haven’t tracked it carefully enough to answer with confidence. One practical starting point: look at one checking account and one credit card, which for many households covers the vast majority of spending. Download a year’s worth of transactions. Sort them. The number is in there - and it’s often different, sometimes higher and sometimes lower, than what people assumed.
The Retirement Spending Curve Many People Don’t Expect
Spending in retirement doesn’t follow a straight line - and understanding the shape of that curve changes how you plan for it.
In the first two to four years, many retirees spend more than they were spending while working. The home projects deferred for a decade finally happen. The trips that kept getting pushed to “someday” become this year and next year. Life gets fuller before it gets quieter, and that’s a good thing - but it has real financial implications that a flat projection won’t capture.
Then, typically in the mid-seventies and beyond, spending comes down naturally. There’s a phrase that captures this arc well: the 60s are go-go, the 70s are slow-go, and the 80s are no-go. It’s blunt, but it’s accurate, and it shows up in the data consistently.
This matters for planning in both directions. The early years of retirement are likely to cost more than expected, so building that into the projection is important. And the later years cost less, which means the fear of running out of money at 90 is often less acute than a flat spending assumption would suggest.
The Eighty Percent Rule Is a Blunt Instrument
The old guideline that retirees need eighty or ninety percent of their pre-retirement income is worth examining skeptically.
Think about what changes when you retire. The mortgage may be paid off or close to it. The kids are grown and no longer a line item. Commuting costs disappear. Work-related expenses - clothing, lunches, professional development - are gone. For many people, the actual spending number in retirement is meaningfully lower than their working income, not because they’re sacrificing, but because the expenses tied to work and child-rearing simply no longer exist.
For others, it’s higher - especially in those early go-go years when they’re finally doing what they put off for decades.
The point isn’t that the eighty percent rule is wrong. It’s that it might have nothing to do with you. A retired couple living modestly in a paid-off home has a very different number than a couple with the same income who plans to travel extensively and help their children financially. Applying the same benchmark to both would be nearly useless.
You need what you need. That number is worth finding.
Don’t Retire Early to Eat Peanut Butter Sandwiches
One principle worth carrying into any retirement planning conversation: don’t sacrifice the quality of retirement to achieve the timing of retirement.
If the only way the math works is to cut spending to the bone - no vacations, no discretionary anything, no margin for the unexpected - that plan deserves a second look. Working another year or two, adding more to the kitty, and retiring into a life that actually reflects what you worked for is usually the better trade.
The go-go years are finite. Arriving at them with enough to actually enjoy them is the goal.
Retirement planning done well isn’t about finding the earliest possible exit date. It’s about building a financial foundation that lets you live the retirement you actually want - and then holding that foundation steady for however many decades follow.
The math to figure that out is more accessible than many people think. The starting point is just getting your real number on the table.
Rawe Financial is a family-owned financial services practice in Northern Kentucky, helping individuals and families navigate their way towards retirement. If it would be helpful to talk to someone who can help you figure out what works for you, we’d welcome a conversation.