When Can I Retire & How Much Can I Spend to Live a Comfortable Life?

By Anastasia Taber, CFP®

Retirement can feel like the finish line you’ve been working toward for years—especially as a business owner, when you’ve spent so much of your time building something from the ground up. The big questions are always the same: When can I retire? And once I do, how much can I spend and still maintain a comfortable retirement?

For a long time, many retirement conversations revolved around the “4% rule,” which suggested that withdrawing roughly 4% of your savings each year could allow your portfolio to last 30 years. Using that approach, someone who wanted $120,000 per year might aim for about $3 million in retirement savings.

But real life is rarely that simple. Retirement planning isn’t a plug-and-play formula, especially for entrepreneurs and small business owners whose income may be less predictable or tied to the value of a business. Market performance, inflation, and changes in the cost of living can all influence what a sustainable spending plan looks like. And because these factors move together, they should be considered as part of one cohesive strategy when you’re building your retirement timeline.

The Impact of Market Conditions

When you’re in the accumulation phase of retirement planning, you’re not withdrawing from your accounts just yet; you’re only adding money. During this phase, the sequence of market returns doesn’t matter as much. You can have a mix of good years and bad years over a 10 or 15 year period and your returns will be the same overall because you didn’t withdraw any money during that time. 

But when you finally retire and start taking withdrawals, sequence of returns begins to matter. If you experience a few bad years at the beginning of retirement, it could greatly reduce how long your money lasts. 

Here’s a chart to show what I mean.

In this chart, you can see that Portfolio A, B, and C all start with the same $1 million balance, and withdraw the same $60,000 a year adjusted 3% annually for inflation. However, each portfolio experiences a different mix of high and low returns over the years. Portfolio A has positive returns in the beginning and ends up with $1.1 million left in the bank at age 90. On the other hand, Portfolio C has a few negative returns in the beginning and ends up running out of money around age 87. 

Depending on your overall expenses in retirement, this math could work out the same way regardless of whether you have a $1 million nest egg or a $5 million nest egg. 

The moral of the story? Even if you have a rough idea of how much you need to retire comfortably, you could still run out of money prematurely if you retire in a bear market and don’t have a proper cash flow plan in place. That’s why it’s critical to meet with a financial advisor who can stress test your portfolio and run various what-if scenarios to ensure your retirement assets will last even through the most turbulent of times.

The Impact of Cost of Living 

Have you thought about where you’ll live once you retire? Will you stay in your current city or relocate somewhere new and exciting? The cost of living in Alexandria, VA, is about 25% higher than the U.S. average. Retire to Honolulu, Hawaii, and your cost of living would be about 82% higher than the U.S. and 57% higher than Alexandria’s.

See what I’m getting at here?

Where you choose to live in retirement matters. It plays a major role in how much money you’ll need to live comfortably. That’s not to say you should move to an area with a lower cost of living as soon as you retire—you also need to factor in which location will make you happy and keep you active. But if you choose an area with a higher cost of living, it is important to factor these costs into your retirement planning. 

The Impact of Inflation 

Inflation is known as the silent killer in retirement because it creeps up on you. You never really see it coming until you look back and realize that loaf of bread that costs $4 used to only cost $0.50.

It’s quite common for retirement to last 20 to 30 years. If we use a historical inflation average over the last 20 years of 2.56% per year, the $150,000/year lifestyle you enjoy now could cost you $248,686 in 20 years, and $320,207 in 30 years.

As you continue to save for retirement, keep in mind that you’re saving for today’s income and expenses as well as your future inflated income and expenses. Be realistic about how much you need to save and talk with a financial advisor about ways you can protect your nest egg from the eroding power of inflation.

Confidently Answer “When Can I Retire?” With Our Help

At TABER Asset Management, we know entrepreneurs and small business owners don’t fit into a cookie-cutter retirement formula. Your income may be variable, your wealth may be tied to your business, and your goals often include both personal freedom and long-term financial stability. That’s why planning for a comfortable retirement starts with a clear, personalized analysis of your full financial picture, including your cash flow, savings, investments, business value, and the lifestyle you want to maintain.

Are you interested in having a partner help you map out when you can realistically retire and what it will take to support a comfortable retirement? Reach out by scheduling a 15-minute intro phone call online or call us at 703-380-0968 or invest@taberasset.com. We’d be happy to help you create a plan that brings clarity, confidence, and a timeline you can trust.

About Anastasia

Anastasia Taber is an Associate Advisor and leads the financial planning services division at TABER Asset Management, an independent, fiduciary wealth management firm, in Alexandria, Virginia, and Des Moines, Iowa that strives to do one thing well: manage their clients’ money by creating wealth, building wealth, growing income, and preserving capital so they can experience financial freedom. Anastasia is a CERTIFIED FINANCIAL PLANNER® and has a Bachelor of Arts in English from Georgetown University. She has years of experience working for one of the largest REITS in the U.S., as well as in property management and accounting at a global law firm in Washington, D.C. Anastasia is passionate about exceeding her clients’ expectations and building caring, long-term relationships based on trust. She is known for being detail-oriented and committed to excellence in her work. Anastasia is a co-host on the Creating Wealth podcast. To learn more about Anastasia, connect with her on LinkedIn.