Why Your Retirement Number Isn’t $1 Million: A Smarter, More Personalized Way to Plan

Nicole Cole |
Categories
Retirement

You’ve probably heard the popular advice: 
“You need $1 million to retire.” 

It sounds neat and simple. But for high-net-worth individuals—business owners, executives, and professionals—it’s not particularly helpful. That number doesn’t reflect how long you’ll live, what your lifestyle looks like, or how your assets are structured. 

In other words, your retirement isn’t average. Your plan shouldn’t be either. 

This article will walk you through a more personalized, tax-smart, and lifestyle-driven approach to retirement income planning, built around your values and vision. 

The Problem With the $1 Million Rule 

Once upon a time, $1 million might have been enough. But today, it’s not what it used to be. 

Here’s why that number falls short for many successful professionals:

  • Inflation has quietly changed everything. A million dollars in 2010 now equals about $1.47 million. Courtesy: Bureau of Labor Statistics CPI Inflation Calendar
  • Healthcare costs are significant. According to Fidelity Retiree Health Care Cost Estimate 2024, a 65-year-old individual retiring today can expect to spend an average of $165,000 on healthcare in retirement.
  • You’ll likely live longer than your parents did. Retirement may need to last 25 to 30 years—or more.
  • Your lifestyle probably isn’t shrinking. If you’ve built a life that includes travel, charitable giving, family support, or multiple homes, your spending will reflect that. 

A generic number doesn’t help if it doesn’t match your reality. A better retirement plan starts with your lifestyle and goals, not someone else’s rule of thumb. 

What Actually Shapes Your Retirement Number 

Instead of guessing how much is enough, ask: What does retirement look like for me? 

Here are the key factors that influence your retirement income needs: 

1. Your Lifestyle 

Do you want to travel? Spend more time with family? Start a passion project or charitable foundation? Your desired lifestyle is the single biggest driver of your retirement budget. 

2. Your Location 

Where you retire affects housing costs, taxes, and healthcare. A move to a tax-friendly state or even another country can dramatically change your financial picture. 

3. Health and Longevity 

The healthier you are, the longer you’ll need your assets to last. Planning for three decades of retirement is often the smart move. 

4. Legacy and Family Goals 

Whether you plan to help your children, care for aging parents, or leave a legacy, those commitments shape how much you’ll need. 

5. Your Tax Structure 

Two people with the same amount saved can have very different results based on how their assets are taxed. Taxable, tax-deferred, and tax-free accounts each impact your net income differently. 

All of this points to one conclusion: Retirement income planning for high-net-worth individuals must be personalized and flexible. 

Is the 70–80% Income Replacement Rule Useful? 

The idea that you’ll only need 70 to 80 percent of your working income in retirement is common. But it’s also misleading for many high earners. 

Why? Because your lifestyle likely won’t shrink. You may spend more in the early years of retirement—traveling, pursuing hobbies, enjoying the freedom you worked for. 

Also, the rule doesn’t account for taxes. A withdrawal of $300,000 from a traditional IRA is very different from the same amount taken from a Roth IRA or a brokerage account. 

Focus instead on what you’ll need after taxes and inflation. That’s your true income replacement number, and it’s where real planning begins. 

Smart Withdrawal Planning: What to Know 

Once you retire, how you access your money matters as much as how much you have. 

You’ll likely be drawing from a combination of: 

  • Taxable accounts (e.g., brokerage)
  • Tax-deferred accounts (e.g., traditional IRA, 401(k))
  • Tax-free accounts (e.g., Roth IRA)
  • Other income sources like rental income, annuities, pensions, or Social Security 

Start With a Tax-Aware Withdrawal Order 

A typical sequence might look like this:

  1. Draw from taxable accounts first
  2. Then use tax-deferred accounts like IRAs
  3. Save Roth accounts for later since they offer tax-free growth and no required minimum distributions (RMDs) 

Consider Roth Conversions 

In the early years of retirement, before RMDs begin, converting some IRA assets to a Roth could reduce long-term taxes and improve legacy planning options. 

Avoid Common Tax Traps 

Taxes don’t stop at retirement. Watch for:

  • Medicare surcharges (IRMAA)
  • RMD spikes
  • Capital gains stacking
  • The net investment income tax (NIIT) 

A coordinated withdrawal plan can help you minimize taxes and keep more of what you’ve earned. 

Your Investments Still Play a Big Role in Retirement 

Many people assume they need to get ultra-conservative once they retire. In reality, your portfolio still needs to grow, especially to keep up with inflation. 

Use a “Bucket Strategy” to Manage Risk and Liquidity 

This approach divides your investments into three time horizons: 

  • Short-term (1–3 years): Cash and bonds for near-term expenses
  • Mid-term (4–9 years): Conservative investments with moderate growth
  • Long-term (10+ years): Growth-oriented assets like equities or real estate 

Rebalance Regularly 

As markets shift, your portfolio should be reviewed and rebalanced. This helps you maintain your risk profile and stay aligned with your withdrawal plan. 

Align Investments With Tax Strategy 

The type of account you use also matters: 

  • Bonds often belong in tax-deferred accounts
  • Stocks with qualified dividends may fit better in taxable accounts
  • High-growth investments are ideal for Roth accounts 

Every portfolio decision should support your overall retirement strategy, not just your returns. 

Tie It All Together: Build a Holistic Retirement Plan 

A truly effective retirement plan goes beyond income and investments. It connects every part of your financial life. 

Here’s what it should include: 

  • A tax-aware withdrawal strategy
  • Smart investment management
  • Charitable giving or legacy planning
  • Estate planning and asset protection
  • Risk management, including long-term care
  • Liquidity planning for large purchases or emergencies 

When all of these areas are working together, your plan becomes much more than a financial model—it becomes a tool for living well. 

Review Your Plan Often 

Even the best plans need regular adjustments. Markets change. Life evolves. Your priorities shift. 

Annual (or semi-annual) reviews help you:

  • Adjust spending or income
  • Take advantage of new tax opportunities
  • Revisit your goals and investment allocation
  • Ensure your plan still reflects your life 

This isn’t about micromanaging. It’s about staying intentional, so your retirement continues to support the way you want to live. 

Why Work With a Retirement Advisor? 

There’s no shortage of calculators and DIY tools online. But if your financial life is more complex, working with an experienced advisor can help you:

  • Coordinate tax, investment, and estate planning
  • Plan proactively for RMDs, Roth conversions, and charitable giving
  • Stay aligned with your goals—year after year
  • Avoid the pitfalls that cost high-net-worth retirees the most 

This is about strategy, not sales. And the right advisor adds clarity, peace of mind, and flexibility to your retirement planning. 

Take the Next Step 

Ready for a more personalized conversation? 
We help high-net-worth individuals build retirement income strategies that fit their lifestyle, values, and long-term goals.

Start a conversation with us

Final Thought 

You’ve spent your life building wealth, navigating complexity, and creating options. Your retirement should reflect all of that—on your terms, in your time, with the right strategy behind it. 

Forget the $1 million myth. 
Build the plan that’s right for you.