Retirement planning answers a practical question: will your savings last as long as you do? Unlike FIRE planning, which often targets leaving work decades early, traditional retirement planning focuses on replacing income from your 60s through your 80s and beyond.
The core variables are how much you have saved, how much you spend each year, how your portfolio is invested, and how long you need withdrawals to continue.
Withdrawal rates and portfolio longevity
Your withdrawal rate is annual spending divided by portfolio value. A 4% rate on a $1,000,000 portfolio means $40,000 in year one, adjusted for inflation in subsequent years.
Higher withdrawal rates deplete the portfolio faster. A 5% rate may work in favorable markets but fails more often over 30-year periods. A 3% rate is conservative but requires a larger nest egg.
Retirement calculators project year-by-year balances under different return scenarios so you can see whether your plan survives 25, 30, or 40 years of withdrawals.
Sequence-of-returns risk
Poor returns in the first years of retirement do more damage than poor returns later. If your portfolio drops 30% while you are withdrawing 4%, the combination can permanently impair your plan.
Mitigations include holding a cash buffer for the first few years, reducing withdrawals during downturns, maintaining a balanced stock-bond allocation, and delaying large discretionary spending early in retirement.
This is why many planners recommend flexibility, a fixed 4% inflation adjustment is a starting point, not a rigid rule for every year.
Social Security and other income
Social Security benefits reduce how much your portfolio must provide. Claiming at full retirement age (66–67 for most people today) vs. age 62 vs. 70 changes your monthly benefit significantly.
Delaying to 70 increases benefits by roughly 8% per year after full retirement age. If you are healthy and have other income, delaying can be one of the best risk-adjusted decisions available.
Pensions, rental income, annuities, and part-time work also offset portfolio withdrawals. Include all reliable income sources in your plan.
Healthcare and long-term care
Medicare starts at 65, but premiums, supplemental insurance, and out-of-pocket costs still add up. Early retirees face a gap, often a decade or more, where they must fund health insurance privately.
Long-term care is the wild card. Nursing home and assisted living costs can exceed $100,000 per year. Some planners budget for long-term care insurance; others plan to self-insure with a larger portfolio.
Stress-test your retirement plan
Enter your portfolio, annual spending, expected return, withdrawal rate, and time horizon to see how long your money lasts and what balance remains at the end.
Pair the retirement calculator with the investment growth calculator to model accumulation before retirement and the FIRE calculator if you are planning to leave work earlier than 65.