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Can I Retire at 60 With $3 Million?
Picture turning 60 with a little over $3 million saved. The house is paid off. The kids are grown. And somewhere in the back of your mind, a question has started to get louder: can we actually stop working, and if we do, how much can we spend without worrying about it?
It sounds like a question with a simple answer. It is not. The portfolio balance is only one piece. The real answer depends on what retirement is supposed to look like, what it costs to live that life in California, when each income source starts, and how the years in between get funded.
To show how those pieces fit together, I want to walk through a hypothetical couple. Mark and Lisa Alvarez are not real people. Their names, numbers, and conversations are illustrative, built to reflect some of the questions professionals nearing retirement in California may face. The goal is not to tell you what to do. It is to show how a plan gets built, and why the conversation before the projection matters as much as the math itself.
Important note: This is a hypothetical illustration, not a forecast or a representation of actual client performance. The projections use stated assumptions, including a constant 6% annual portfolio return, and actual investment returns, inflation, taxes, health care costs, and other factors will vary. A positive result under these assumptions does not establish that a retirement plan will be successful or sustainable.
This post walks through who they are, what they want, what makes their situation distinctly Californian, what the base-case projection shows, whether they could retire earlier, spend more, or help their grandchildren with college. It does not cover the tax strategy that might come next, such as Roth conversions. For that topic, see Roth Conversions in the 5-10 Year Window Before RMDs.
Who Are Mark and Lisa?
Mark and Lisa are both 60 and live in Irvine, in the same house they bought in 2001. They raised two children there. They now have five grandchildren, three of whom live about 20 minutes away.
Mark is an engineering manager at an aerospace company and earns $195,000 a year. Lisa is a project director at a small architecture firm and earns $125,000. Her firm does not offer a 401(k), which, as you will see, creates a small tax puzzle of its own.
They have done what careful savers try to do. They maxed out their retirement accounts, invested steadily, paid off the mortgage, and did not spend much time thinking about the finish line. Retirement was simply something that would happen "around 65," mostly because that is when people retire.
Then a colleague of Mark's retired at 61. And for the first time, they started asking whether the number they had in mind was a plan or just a habit.
Here is the shape of the next 35 years. The rest of the post keeps coming back to these dates.
What Do Mark and Lisa Actually Own?
See the full breakdown
| Account | Owner | Balance | Tax treatment |
|---|---|---|---|
| 401(k) | Mark | $1,380,000 | Pre-tax |
| Traditional IRA (rollover from prior employer) | Lisa | $900,000 | Pre-tax |
| Roth IRA | Mark | $55,000 | Tax-free |
| Roth IRA | Lisa | $30,000 | Tax-free |
| Joint brokerage account | Joint | $650,000 | Taxable (about $200,000 cost basis) |
| Cash and savings | Joint | $90,000 | Taxable |
| Liquid total | $3,105,000 | ||
| Home in Irvine (paid off) | Joint | $1,650,000 | |
| Total net worth | about $4,755,000 |
A few things stand out before any projection is run.
73%of their investments are pre-tax, meaning distributions will generally be included in taxable income, federal and California.
$85Kin Roth IRAs, a small tax-free bucket that limits flexibility later when managing brackets and Medicare premiums.
69%of the brokerage account is unrealized gain. If the entire account were sold at its current value and basis, about 69% of the proceeds would be capital gain, which California taxes as ordinary income.
$1.65Min their paid-off home, which does not fund groceries or travel unless they sell or downsize.
That last point can matter in California, where home values are high. A household can look very wealthy on paper and still need to be careful about cash flow, because so much of the wealth sits in a home or in accounts that carry a future tax bill.
Why Should I Start With Goals Instead of the Portfolio?
It is tempting to begin with the portfolio: plug in a balance, apply a withdrawal rule, and get a number. The problem is that the number answers a question nobody asked. A plan built around a 4% rule does not know that you want to travel heavily for ten years, replace a car every five, or help pay for a grandchild's college.
So the planning process starts with a conversation, not a spreadsheet. Here is roughly how that conversation might go for Mark and Lisa.
PlannerWhen do you want to retire?
Mark and Lisa“We always figured 65. We honestly never questioned it. And we had no idea what we would do for health insurance before Medicare, so 65 seemed like the safe answer.”
PlannerTheir target age was not really a goal. It was a default, anchored to Medicare.
That does not make 65 wrong, but it does mean the plan should test earlier ages too. So the base case uses 65, with two alternatives to compare: retiring at 62, and retiring right now at 60.
PlannerHow much do you want to spend?
Mark and Lisa“We want to go line by line. Show us what we spend today and how that might change once we stop working.”
PlannerThat is a harder question than it sounds, and it is where most of the useful work happens.
How Much Will I Spend in Retirement in California?
Rather than one big monthly number, their spending was broken into four layers: core living, home costs, health care, and big goals. Each layer behaves differently over time, so each one gets modeled on its own.
Core living expenses: $8,200 per month
This is the month-to-month cost of their life, in today's dollars, excluding property tax, home insurance, home maintenance, health care, and big goals. Groceries and dining out are the largest pieces, at $2,100 a month combined.
See the line items
| Category | Monthly |
|---|---|
| Groceries | $1,200 |
| Dining out | $900 |
| Utilities, internet, phones | $650 |
| Car insurance, fuel, maintenance | $700 |
| HOA dues | $350 |
| Entertainment, hobbies, memberships | $900 |
| Clothing and personal care | $500 |
| Family gifts and holidays | $800 |
| Charitable giving | $500 |
| Umbrella and other insurance | $300 |
| Subscriptions and miscellaneous | $400 |
| Buffer for irregular expenses | $1,000 |
| Total | $8,200 |
That comes to $98,400 a year. One line in that budget matters more than it looks: a $1,000-a-month buffer for irregular expenses. Appliances break, a car needs an unplanned repair, a family need comes up, and a spending plan with no slack tends to feel tight even when the math says it works.
Home costs: about $25,800 per year
A paid-off house still costs money every year. Three costs stay with them for life:
Property tax
$8,800/yr
Kept low by Prop 13, and capped at 2% growth a year.
Why this amount
Their $8,800 works out to about 1.2% of the assessed value, including local assessments. A new buyer paying a similar rate on today's market value would owe roughly $19,600 a year. And because the 2% cap sits below the plan's 2.5% inflation assumption, this bill gets a little smaller in real terms every year.
Homeowners insurance
$5,000/yr
Modeled on its own, because California premiums are moving.
Why this amount
In a lot of states, homeowners insurance is a footnote. In California right now, it is not. Premiums have climbed and some insurers have pulled back from writing new policies. Keeping this line separate from core spending means it can be revisited as premiums change, rather than being buried inside a monthly budget.
Maintenance
$12,000/yr
About 0.75% of the home's value, for a house that is 25 years old.
Why this amount
Over the next decade, the roof, HVAC system, water heater, and windows may all reach the end of their useful lives. A steady yearly budget keeps those surprises from landing on the portfolio all at once. Some years will cost less, and the year the roof is replaced will cost more.
Prop 13 is easiest to see side by side. Their property tax is based on the assessed value, not what the house would sell for:
What their property tax is based on
Assessed value (Prop 13)$740K
Market value$1.65M
Assessed value is the 2001 purchase price of $450,000, grown at no more than 2% a year (as of the original publication date).
There is a catch for the next generation. Under Proposition 19, children who inherit a parent's home keep the low Prop 13 assessment only if they move in as their primary residence, and even then subject to a value limit (as of the original publication date). The low property tax that helps Mark and Lisa may not carry over to their children the way it once might have.
Health care: the pre-Medicare question
This is the expense that kept them anchored to 65, so it deserves the most attention.
After 65, they will pay Medicare Part B and Part D premiums, which rise with income under IRMAA rules. On top of that, the plan assumes about $7,500 a year for the couple to cover a Medigap supplement, dental, vision, and out-of-pocket costs.
Before 65, there is no Medicare. If they retire early, they would buy coverage through Covered California. Actual premiums depend on location, age, and plan tier. For modeling purposes, the projection assumes about $1,350 per person per month for unsubsidized coverage, or about $32,400 a year for the two of them.
Here is where it gets interesting. Covered California premium tax credits are based on household income. The temporary expansion that removed the upper income limit for 2021 through 2025 has expired, so for 2026, household income above 400% of the applicable federal poverty level generally eliminates eligibility for the federal Premium Tax Credit. For a two-person household buying 2026 coverage, that line sits at $84,600 of household income for purposes of the Premium Tax Credit (as of the original publication date).
What counts toward that line depends on which account the money comes from. Say they spend $100,000 in one of the years before Medicare:
How much of $100,000 of spending counts as income
Subsidy cliff: $84,600
Cash or Roth IRA$90K cash + $85K Roth$0adds nothing to income
Brokerage accountabout 69% gain at current basisAbout $69,000under the line
IRA or 401(k)distributions are generally income$100,000over the line
Illustrative, based on the brokerage account's current value and cost basis. Counts only the income created by the withdrawal itself; dividends, interest, and any other income also count toward the line. Roth withdrawals assume qualified distributions. Threshold for 2026 coverage, as of the original publication date.
The same spending can cost very different amounts depending on which account pays for it. Staying under the line may keep them eligible for premium tax credits. Above it, they would generally not be eligible for the federal Premium Tax Credit, which may mean paying the full premium of about $32,400 a year for the two of them. Their $90,000 of cash and $85,000 in Roth IRAs are the money they can spend without raising their income for subsidy purposes, and at the account's current value and basis, about 69 cents of each dollar sold from the brokerage account would be capital gain that counts as income. For them, whether they retire at 60 or 62 could hinge as much on this as on the portfolio balance. I cover this in more depth in Roth Conversions and ACA Premiums.
Cars: $40,000 every five years
Mark and Lisa prefer to pay cash for cars. Every five years, one of them replaces a vehicle, spending around $55,000 and trading in the old one for roughly $15,000. That is a net $40,000 cash outlay every five years, starting in 2027 and continuing through 2047, when they are 81. A car bought at 81 could reasonably carry them into their mid-80s or beyond.
Some people fold car payments into their monthly budget, and that works too. Modeling cars as a separate lump sum makes those heavier years visible, which matters because a big withdrawal in a down market can hurt more than the same amount spread out.
Travel: $30,000 per year for the first ten years
This is the goal that made them light up. They pictured one international trip a year, a couple of domestic trips, and the freedom to fly to see their out-of-state grandchildren on short notice without second-guessing it.
Travel is kept separate from core spending on purpose. Travel at 85 may look very different from travel at 65. Building a dedicated travel budget for the first decade, and then letting it taper off, reflects how retirement spending tends to change over time. It also gives permission. When a trip is already accounted for, it can be enjoyed instead of worried about.
Everything together, before taxes
Stacked up, the four layers come to about $207,200 in a year that includes a car purchase, all in today's dollars. That is before a single dollar of federal or California income tax. It may be a bigger number than expected from "about $8,200 a month," and that is exactly why the layers are worth separating.
See the layer totals
| Layer | Annual amount |
|---|---|
| Core living expenses | $98,400 |
| Home costs (property tax, insurance, maintenance) | $25,800 |
| Health care after 65 (premiums, supplement, out of pocket) | about $13,000 |
| Big goals (travel and a car purchase) | $70,000 |
| Total, before income taxes | about $207,200 |
Can I Help Pay for My Grandchildren's College?
This goal came up near the end of the conversation, and it clearly mattered most.
PlannerIs there anything else you want the plan to make room for?
Mark and Lisa“Our kids are doing fine, but between a mortgage in Orange County, childcare, and their own retirement savings, there is not much left over for college funds. We would love to take that off their plate.”
PlannerIs there anything that worries you about that?
Mark and Lisa“What we do not want is to give it away now and end up leaning on our kids in our eighties because we ran short.”
PlannerSo college funding starts at zero, and gets sized only after every other goal is covered.
Zero is not the goal. It is a placeholder, because the right way to size a gift is to confirm everything else is covered first and then see what is left. The plan will then test contributions of $6,000 per grandchild per year, or $30,000 a year across all five, for 15 years, into California's ScholarShare 529 plan. The result comes later in this post.
There are a few California details worth knowing here, as of the original publication date:
- California does not offer a state income tax deduction for 529 contributions, unlike some other states.
- California does not conform to the federal 529-to-Roth IRA rollover provision, so a rollover that is tax-free federally may carry California tax consequences.
None of these make a 529 a poor choice. The federal tax-free growth for qualified college costs still applies. They are just the kind of state-level details that are easy to miss when most published guidance is written for a national audience.
What Income Will We Have in Retirement?
While they work, their combined salary is $320,000 a year, and the plan assumes both salaries rise 3% a year until retirement. Once they retire, the main income source is Social Security.
Mark · from 67$3,850a month in Social Security
Lisa · from 67$2,800a month in Social Security
Combined$6,650a month, or $79,800 a year
In today's dollars, claiming at full retirement age (67). Hypothetical estimates.
Both were born in 1966, which makes 67 their full retirement age. Claiming earlier would permanently reduce their benefits, and waiting until 70 would increase them. For now, the base case assumes both claim at 67. The trade-offs of different claiming ages are covered in When to Claim Social Security: 62 vs. 67 vs. 70.
One helpful California note: California does not tax Social Security benefits. Up to 85% of their benefits may be included in federal taxable income, but none of it is subject to California income tax. More on that in Social Security Taxation and California.
The two-year gap
Notice the timing on the timeline. If they retire at the start of 2031, the year they turn 65, there are two full years, 2031 and 2032, with no paycheck and no Social Security. In this projection, they have no other income during those years, so the portfolio covers the $200,000-plus of spending, plus whatever taxes the withdrawals create.
If they retire right now, that gap stretches to six full years, 2027 through 2032, and four of those years, 2027 through 2030, also need private health insurance before Medicare. This is where a plan either holds or strains, and it is why the order of withdrawals, not just the amount, becomes so important. The idea of sequence risk during these early years is covered in more depth in Retirement Income Glide Path and Sequence of Returns.
Are We Saving the Right Way in Our Final Working Years?
Their last few working years come with a few rule changes that are easy to overlook.
Mark's 401(k): a larger catch-up, with a Roth twist
Workers age 50 and over can normally add a catch-up contribution, but SECURE 2.0 created a larger catch-up for ages 60 through 63. Here is what can go into Mark's 401(k) in 2026:
ContributionAmountRunning total
Standard employee limitPre-tax$24,500$24,500
+Age 60 to 63 catch-upRoth, required$11,250$35,750
+Employer match (3% of salary)Pre-tax$5,850$41,600
=Total into his 401(k)$41,600$41,600
2026 limits as of publication date. The match assumes a 3% employer contribution on a $195,000 salary.
There is a catch. Starting in 2026, employees whose prior-year FICA wages exceeded $150,000 (as of publication date) must make catch-up contributions as Roth, not pre-tax. Mark earns $195,000, so his catch-up goes in after tax.
That is not necessarily bad news. With 73% of their savings in pre-tax accounts, a few years of required Roth catch-up contributions may add some useful tax diversification. But it does mean slightly less tax savings today, and it changes the numbers the plan works from.
Lisa's savings: why they go to the brokerage account
Lisa's employer has no 401(k), so each savings option gets checked in turn. Each one is ruled out by a different rule:
- Workplace 401(k)? NoHer small architecture firm does not offer one.
- Deductible traditional IRA? NoMark has a workplace plan, and their joint income is above the deduction phase-out for a spouse in that situation.
- Direct Roth IRA? NoTheir income is above the limit for contributing directly.
- Backdoor Roth? BlockedThe pro-rata rule. With $900,000 already in a pre-tax IRA, nearly all of any conversion would be taxable.
- CalSavers? Opt outEmployers without a plan are generally required to offer California's CalSavers program, which defaults to a Roth IRA. Because a direct Roth contribution is not permitted at their income, she would need to opt out rather than let the default enroll her.
- Joint brokerage account YesNo upfront deduction, but the money stays flexible, and it avoids the tax tracking that comes with nondeductible IRA contributions.
None of this changes whether they can retire. It is a good example of how a detail that looks small, where one spouse's savings go, depends on the other spouse's plan, their joint income, and an old rollover IRA all at once.
What Assumptions Does the Projection Use?
With the goals, costs, income, and savings defined, the projection can be run. In short, it assumes a 60/40 portfolio returning about 6% a year, 2.5% inflation, 5% health care inflation, and a plan that runs to age 95.
See all 10 assumptions
| Assumption | Value |
|---|---|
| Asset allocation | 60% stocks / 40% bonds in every investment account (cash held separately) |
| Portfolio return | About 6.0% per year, nominal (blended 60/40) |
| Salary growth | 3.0% per year for both, until retirement |
| General inflation | 2.5% |
| Health care inflation | 5.0% |
| Education cost inflation | 5.0% |
| Social Security cost-of-living adjustment | 2.5% |
| Home appreciation | 3.0% |
| Property tax growth | 2.0% (Prop 13 cap) |
| Planning horizon | Age 95 for both |
(as of the original publication date)
A 60/40 mix keeps enough in stocks to grow over a retirement that could last 30 years or more, and enough in bonds to fund several years of withdrawals without selling stocks in a downturn.
A note on the 6% return. Every projected number from here on assumes the portfolio earns exactly 6%, every single year. Expecting that kind of straight-line growth in real life is entirely unrealistic. No portfolio grows that way. Some years are up sharply, some are down, and the order those years arrive in can matter as much as the average. These projections also do not deduct advisory fees or fund expenses, which would lower every projected balance in this post. The straight-line projection is still useful as a starting point, because it shows whether the plan works on average. This post does not test the plan against volatile returns. A complete retirement analysis would also test the plan against different sequences of investment returns, inflation, health care costs, and other uncertainties, for example with a Monte Carlo analysis or historical scenarios such as poor returns early in retirement. None of the results in this post should be read as establishing that the plan would be sustainable under actual market conditions.
Can We Afford to Retire at 65?
The projection answers this the same way you might at the kitchen table: compare what comes in with what goes out, and see how much the portfolio has to cover.
Until the end of 2030, their salaries cover everything, including Mark's 401(k) contributions and roughly $20,000 to $69,000 a year of extra savings into the brokerage account. By the time they retire at the start of 2031, the year they turn 65, after their last full year of work in 2030, the portfolio (their investments and cash, not counting the house) is projected to grow from $3.1 million today to about $4.34 million in 2030 dollars. Adjusted for inflation, that is about $3.93 million in today's dollars.
Then the paychecks stop. The tables below are in future dollars, not today's dollars: each year's figures include inflation up to that year, so a 2041 amount buys less than the same amount would today.
Start with where the money goes. These are the same layers from earlier, now projected forward, plus income taxes:
See the numbers
| Year | Living | Housing | Health care | Goals | Taxes | Total |
|---|---|---|---|---|---|---|
| 2031 Age 65 | $108,615 | $28,399 | $31,284 | $33,114 | $1,570 | $202,982 |
| 2032 Age 66 | $111,331 | $29,089 | $24,345 | $79,199 | $8,023 | $251,987 |
| 2033 Age 67 | $114,114 | $29,797 | $17,830 | $34,791 | $4,197 | $200,729 |
| 2034 Age 68 | $116,967 | $30,522 | $18,722 | $35,661 | $7,394 | $209,265 |
| 2037 Age 71 | $125,960 | $32,808 | $21,673 | $89,606 | $11,996 | $282,043 |
| 2041 Age 75 | $139,037 | $36,130 | $26,344 | $0 | $53,201 | $254,711 |
| 2061 Age 95 | $227,828 | $58,697 | $118,439 | $0 | $195,147 | $600,111 |
Housing is property tax, insurance, and maintenance. Goals are travel for the first 10 years of retirement (2031 through 2040) and a car every 5 years (2032 and 2037 shown). Taxes are federal and California income taxes. Columns may not sum exactly because of rounding in the projection software. (as of the original publication date)
Then subtract what Social Security covers. Whatever it does not cover has to come from the portfolio. In the two gap years, that is everything: about $203,000 in 2031 and $252,000 in 2032. Once both benefits are flowing in 2034, the amount needed from the portfolio falls to about $114,000.
See the numbers
| Year | Total spending | − Social Security | = Needed from the portfolio | Portfolio at start of year | Withdrawal rate |
|---|---|---|---|---|---|
| 2031 Age 65 | $202,982 | $0 | $202,982 | $4,339,991 | 4.7% |
| 2032 Age 66 | $251,987 | $0 | $251,987 | $4,398,942 | 5.7% |
| 2033 Age 67 | $200,729 | $40,995 | $159,734 | $4,415,543 | 3.6% |
| 2034 Age 68 | $209,265 | $94,856 | $114,409 | $4,525,412 | 2.5% |
| 2037 Age 71 | $282,043 | $102,150 | $179,893 | $5,032,895 | 3.6% |
| 2041 Age 75 | $254,711 | $112,754 | $141,957 | $5,755,432 | 2.5% |
| 2061 Age 95 | $600,111 | $184,762 | $415,349 | $10,137,478 | 4.1% |
Hypothetical base-case projection. All amounts are in future (inflation-adjusted) dollars. Social Security starts partway through 2033, so that year is partial. Total spending is the yearly total from the chart above. (as of the original publication date)
A few things jump out:
- The gap years lean on the portfolio. In this projection, 2031 and 2032 have no other income, so spending and taxes come from the portfolio. The second year is heavier because it includes a car.
- Medicare costs more at first. Health costs in the projection are highest in 2031 and 2032, then drop. That lines up with IRMAA, which sets Medicare premiums based on income from two years earlier, when they were still earning full salaries.
- Social Security shifts the math. Once both benefits are flowing, the amount the portfolio needs to cover falls by more than half.
- Health care grows the fastest. Living costs roughly double between 68 and 95, but health care grows more than sixfold, from about $19,000 to about $118,000 a year. Part of that is health care inflation, and part is consistent with higher IRMAA tiers as RMD income rises: the projection shows health costs jumping about 23% in 2044, 28% in 2052, and 24% in the final year, compared with about 5% in a typical year.
- Taxes are unusually low for a decade. During the low-tax decade on the timeline, 2031 through 2040, their projected tax bill ranges from about $1,600 to $12,000 a year, because spending comes from cash and the brokerage account.
How Large Are the Portfolio Withdrawals in This Projection?
Knowing how much they need is only half the answer. The other half is how much they need relative to how much they have. The withdrawal rate measures that: the share of the portfolio the projection takes out each year to cover spending, goals, and taxes after Social Security. It shows how hard the portfolio is working in a given year. It is not a test of sustainability on its own, because whether any rate holds up depends on the time horizon, the asset allocation, taxes, how flexible spending is, and the order in which returns arrive.
In this projection, the withdrawal rate is highest in the two gap years: about 4.7% in 2031 and 5.7% in 2032, when the portfolio covers everything. In 2033, with a partial year of Social Security, it falls to about 3.6%, and once both benefits are flowing it drops to about 2.5%. From there it ranges from about 2.4% to 4.1% through 95, with small bumps in the years they buy a car.
This is why the gap years deserve so much attention. A poor market in 2031 or 2032, right when withdrawals are highest, could do more damage than the same decline ten years later. The straight-line projection in this post cannot show that risk. A complete retirement analysis would also test the plan against different sequences of investment returns, inflation, health care costs, and other uncertainties.
What Happens When RMDs Start at 75?
As the timeline shows, their required minimum distributions are scheduled to begin at 75. That is the SECURE 2.0 age for anyone born in 1966 (as of the original publication date). And this is where the projection reveals something important.
During their low-tax decade, the projection spends down their cash and brokerage account while the 401(k) and IRA keep growing untouched. By 75, the first RMD of $222,559 implies roughly $5.5 million in pre-tax accounts (in 2041 dollars), about 95% of their entire portfolio.
Then the tax bill steps up:
Age 74 · 2040$4Kin income taxes, the last year before RMDs
Age 75 · 2041$53Kin the first year of RMDs, about 13 times the year before
Age 95 · 2061$195Ka year by 95, as required withdrawals keep growing
Projected federal and California income taxes, in future (inflation-adjusted) dollars. Hypothetical base-case projection.
The required distribution is larger than the amount the projection needs from the portfolio for spending. In 2041 the projection needs about $142,000 from the portfolio, but the RMD requires a withdrawal of about $223,000. The excess is taxed, then reinvested in the projection.
And the problem outlasts them. If one spouse dies, the survivor may face similar RMDs taxed at single-filer rates. Children who inherit pre-tax accounts generally must empty them within 10 years, which may fall during their own peak earning years.
A decade of low taxable income followed by large required withdrawals is the kind of pattern where Roth conversions may help. Whether conversions would help, and how much to convert each year, depends on the household's brackets, IRMAA thresholds, and California tax, and it would need its own analysis. For background, see Roth Conversions in the 5-10 Year Window Before RMDs.
Where Does the Portfolio End Up?
In the straight-line projection, the portfolio keeps growing even with every goal funded:
Here is where the projection ends up at age 95:
Age 95 · in 2061 dollars$10.3Mprojected portfolio, after 30 years of retirement with every goal funded
Age 95 · in today's dollars$4.36Mmore purchasing power than the $3.1 million they have today
Hypothetical base-case projection assuming a steady 6% return. Neither figure counts the house.
That is not the goal. Nobody sets out to die with the largest possible balance. The goal is to get the most life out of the money, in a way that reflects what matters most to them. So the base case is really the beginning of a better conversation, starting with a question Mark and Lisa never asked: does it have to be 65?
Can We Retire at 62?
Remember, 65 was a default tied to health insurance, not a goal. And the plan already budgets for Covered California premiums before Medicare, using a modeling assumption of about $1,350 per person per month, or about $32,400 a year for the two of them in today's dollars. So what happens if they retire at 62 instead, with the plan still projected to age 95?
If they retire at 62, the projection shows about $1.9 million less at 95 than if they work until 65. Under these assumptions, the plan still funds every goal through 95.
Can We Retire Right Now, at 60?
Now take it one step further. What if Mark and Lisa wanted to turn in their notice today and stop working altogether? Here is what that looks like:
Under these assumptions, the projection shows that retiring at 60 remains feasible, although the margin is considerably thinner than in the age-65 scenario: about $2.5 million less at 95, because the years before Medicare and Social Security place greater demands on the portfolio. That result comes from a straight-line projection. It does not establish that retiring at 60 would be sustainable under actual market conditions.
To be clear, this is not about Mark and Lisa retiring today. They are not planning to. It is about understanding their financial flexibility if their circumstances changed, such as a change in health or a family member needing care.
In this case, they like their jobs and want to keep working until 65. So the base case remains the plan.
Could We Spend More in Retirement?
If they are going to work until 65 anyway, the next question is whether they could spend more once they stop. What if they spent $10,200 a month instead of $8,200? That is an extra $2,000 a month, or $24,000 a year in today's dollars, on top of everything else already in the plan:
Under these assumptions, the projection still funds every goal, from the travel decade to the cars to health care, even with $24,000 more spending every year. It shows about $1.1 million less at 95.
What If They Fund 529s for All Five Grandchildren?
Remember what mattered most to them. Their children live in high-cost areas, where a mortgage, childcare, and their own retirement savings leave little room for college funds. Helping pay for their grandchildren's education is a way to help their kids, too, as long as Mark and Lisa never become a burden on them later. So what if, instead of spending more, they put $6,000 a year into a 529 plan for each of their five grandchildren, $30,000 a year in all, for 15 years?
Under these assumptions, the projection shows a little less money at the end, about $1 million less at 95, while still funding everything they wanted to do. That is the trade-off they said they wanted: helping their grandchildren now, while staying on track themselves.
None of these scenarios is meant to tell Mark and Lisa exactly what to do for the rest of their lives. The goal is to show them what is possible and to spark conversations they may never have had before about what actually matters most to them:
- Do they want to retire sooner and start an adventure they have been looking forward to?
- Do they want more time to take care of themselves and their health?
- Do they want to keep working and be more generous with their children and grandchildren?
- Do they want to give more to their church or the charities they care about?
- Or do they simply want to spend more on the life they already have?
Once they can see the possibilities side by side, they can bring that back to today and decide what, if anything, to change.
From there, the rest of the planning follows: the tax strategy, the order of withdrawals, insurance, and the estate plan. But it all starts with one question: how do you align your retirement with what matters most to you? That means not just running on default assumptions about how long you need to work or how much you should spend. It means being intentional, starting today, about doing the things that are meaningful to you.
For Mark and Lisa, the next question would be taxes: whether Roth conversions during the low-tax decade could reduce the tax bill at 75 and beyond. That is a planning question of its own, beyond the scope of this case study.
A quick question for you. Is it helpful to see a retirement plan taken apart like this, line by line, to show what actually determines whether it works? I would genuinely like to know. You can reply by email at hpatel@trustedpathwealth.com.
Why Does the Conversation Matter More Than the Spreadsheet?
It would have been easy to skip straight to the math with Mark and Lisa: $3.1 million, 4% withdrawal rate, done. That shortcut would have missed nearly everything that makes their plan theirs.
It would have missed that 65 was a default tied to health insurance, not a goal. It would have missed that the portfolio needs to cover more than $200,000 in each of their first two retirement years. It would have missed that 73% of their savings sits in pre-tax accounts whose distributions will generally be taxable, and that the share grows to about 95% by the time RMDs begin, that their property tax is a hidden advantage, and that the thing they care about most is helping their grandchildren without becoming a burden later.
A projection is only as useful as the inputs behind it. The conversation is what makes the inputs real.
If you are asking similar questions about your own retirement, a good place to start is the same exercise Mark and Lisa went through: separate your spending into core expenses and time-limited goals, list which accounts each dollar would come from, and mark the years between your last paycheck and your first Social Security check. You can also browse our other sample financial plans. And if you would like to walk through your own version of this with a fiduciary advisor, you are welcome to schedule an introductory conversation. No cost or obligation. Scheduling does not establish an advisory relationship.
Important Disclosures About These Projections
Mark and Lisa Alvarez are hypothetical. They are not clients, and their situation is a composite created for illustration. The projections in this post were produced with RightCapital financial planning software using the assumptions described above. They are hypothetical, do not reflect actual investment results, and are not guarantees or predictions of future results. They assume a steady 6% annual return, which real markets do not deliver, and they are shown before advisory fees, fund expenses, and transaction costs, all of which would reduce the projected results. Taxes are estimated using simplified federal and California rules in effect for 2026, and future tax law may differ. Investing involves risk, including the loss of principal. Your own results would depend on your circumstances and could differ materially.
Read the full RightCapital disclosure
1 No Warranties. RightCapital makes no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on www.rightcapital.com (the "Platform"). The Platform uses simplified assumptions derived and/or obtained from historical data that are used to create assumptions about potential investment returns.
2 Advice. RIGHTCAPITAL DOES NOT PROVIDE LEGAL, TAX, ACCOUNTING, INVESTMENT OR FINANCIAL ADVICE. RIGHTCAPITAL DOES NOT PROVIDE RECOMMENDATIONS FOR ANY PRODUCTS OR SECURITIES. Your financial professional may not provide tax or legal advice. The appropriate professionals should be consulted on all legal and accounting matters prior to or in conjunction with implementation of any strategy. Use prospectus for any discussions about securities.
3 Data. Data provided by you or your financial professional for your assets, liabilities, goals, accounts, and other assumptions are key inputs for the calculations at RightCapital. The information should be reviewed periodically and updated whenever there is a change in information or circumstances.
4 Monte Carlo Simulation methodology. RightCapital generated Monte Carlo simulations calculating the results of your plan by running the projection 1000 times. Some sequences of returns will give you better results, and some will give you worse results. These multiple trials provide a range of possible results. RightCapital considers a trial to be "successful" if at the end of the planning horizon your invested assets are greater than zero. The percentage of trials that were successful is the Probability of Success of your plan, with all its underlying assumptions.
5 Asset classes used in Monte Carlo simulation. RightCapital uses only a few asset classes. The default return and volatility assumptions of the asset classes are estimated based on the historical return data of indices, which serve as proxies for their respective asset classes. They are not returns of actual investments. The historical return data used to derive returns for all asset classes are: Large Growth, Large Value and Other: S&P 500 Total Return Index, 12/1975 to 12/2025. Mid Cap: Russell Midcap Index, 12/1995 to 12/2025. Small Cap: Russell 2000 Index, 12/1980 to 12/2025. International Equities: MSCI EAFE Index, 12/1975 to 12/2025. Emerging Markets: MSCI Emerging Market Index, 12/1987 to 12/2025. Real Estate: MSCI US REIT Index, 12/2009 to 12/2025. Government: 10 Year Treasury Bond, 12/1999 to 12/2025. Municipal: Bloomberg Municipal Bond Index, 12/1999 to 12/2025. Corporate and International Bonds: Bloomberg US Aggregate Bond Index, 12/1999 to 12/2025. High Yield: ICE BofA US High Yield Index, 12/1999 to 12/2025. Cash: 3 Month Treasury Bill, 12/1999 to 12/2025. Note: The S&P 500 Total Return Index is made up of both large cap growth and large cap value stocks. This index return and volatility data is used for both large cap growth and large cap value asset classes in the RightCapital system as it is an appropriate benchmark for both. RightCapital uses the S&P 500 total return index as the best proxy for any unclassified assets labeled as "Other."
6 Return and volatility assumptions used in Monte Carlo simulations.
| Asset class | Total return | Volatility |
|---|---|---|
| Large Growth | 6.7% | 15.76% |
| Large Value | 6.7% | 15.76% |
| Mid Cap | 7.0% | 17.12% |
| Small Cap | 6.9% | 19.69% |
| International Equities | 7.8% | 16.55% |
| Emerging Markets | 7.8% | 21.63% |
| Real Estate | 8.2% | 17.24% |
| Government | 4.0% | 7.38% |
| Municipal | 3.8% | 4.65% |
| Corporate | 5.2% | 4.17% |
| High Yield | 6.1% | 8.89% |
| International Bonds | 4.0% | 4.17% |
| Cash | 3.1% | 0.54% |
| Other | 6.7% | 15.76% |
7 Tax and Inflation assumptions used in Monte Carlo simulations. Starting federal and state standard deductions, exemptions and the tax brackets used in projections are as of 2026. The following inflation assumptions are used in the projection: General inflation 2.5%; Education inflation 5%; Tax inflation 2.5%; Social Security inflation 2.5%; Health inflation 5%.
8 Assumption and calculation limitations of Monte Carlo Simulations.
8.1 Your resources and goals may be different from the estimates that you provided. The report is intended to help you in making decisions on your financial future based, in part, on information that you have provided and reviewed including, but not limited to, your age, income, assets, liabilities, anticipated expenses and retirement age. Some of this information may change in unanticipated ways in the future and those changes may make this RightCapital projection less useful.
8.2 Inherent limitations in RightCapital financial model results. Investment outcomes in the real world are the results of a near infinite set of variables, few of which can be accurately anticipated. Any financial model, such as RightCapital, can only consider a small subset of the factors that may affect investment outcomes and the ability to accurately anticipate those few factors is limited. For these reasons, investors should understand that the calculations made in this report are hypothetical, do not reflect actual investment results, and are not guarantees of future results.
8.3 Results may vary with each use and over time. The results presented in this report are not predictions of actual results. Actual results may vary to a material degree due to external factors beyond the scope and control of this report. As investment returns, inflation, taxes, and other economic conditions vary from the assumptions, your actual results will vary from those presented in RightCapital. Small changes in these inputs and assumptions may have a significant impact on the results.
8.4 RightCapital considers investments in only a few Broad Investment Categories. RightCapital utilizes U.S. Large Growth, U.S. Large Value, U.S. Mid Cap, U.S. Small Cap, Real Estate, International Equities, Emerging Markets Equity, U.S. Government, U.S. Corporate, U.S. High Yield, International Bonds and Cash. These broad investment categories are not specific securities, funds, or investment products. The assumed rates of return of these broad categories are based on the returns of indices. These indices do not include fees or operating expenses and are not available for investment. These indices are unmanaged and the returns are shown for illustrative purpose. It is important to note that the broad categories that are used are not comprehensive and other investments that are not considered may have characteristics that are similar or superior to the categories that are used in RightCapital.
8.4.1 Investment Risk. Clients and prospective clients should be prepared to bear investment loss including loss of original principal. Clients should assess their tolerance for risk with their financial professional and update when a change in financial status occurs. Investments are subject to many risks depending on the asset class, including but not limited to: Large Growth, Large Value, Mid Cap, Small Cap, Real Estate: Either the stock market as a whole, or the value of an individual company, may go down resulting in a decrease in the value of client investments. Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. If you held common stock, or common stock equivalents, of any given issuer, you would generally be exposed to greater risk than if you held preferred stocks and debt obligations of the issuer. Small cap stocks may be subject to risks such as but not limited to volatility, lack of available information and liquidity due to low trading volume. International Equities, Emerging Markets: Foreign investments may carry risks associated with investing outside the United States, such as currency fluctuation, economic or financial instability, lack of timely or reliable financial information or unfavorable political or legal developments. Those risks are increased for investments in emerging markets. Foreign securities can be more volatile than domestic (U.S.) securities. Government, Municipal, Corporate, High Yield, International Bonds: Investments in fixed income are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. Investing in securities involves risk of loss. Further, depending on the different types of investments there may be varying degrees of risk.
8.6 Fees and expenses. The portfolio returns assume that the portfolio is rebalanced on an annual basis to reflect the target allocation. No portfolio rebalancing costs are deducted from the portfolio value. Fees and expenses are not included, and thus, are excluded, including, but not limited to, fund fees, account fees, product fees and advisor fee. Inclusion of those fees results in lower returns, which would affect the probability of achieving any particular outcome.
8.7 Taxes. RightCapital includes limited accounting for taxes. RightCapital calculates taxes based on your input. RightCapital estimates federal, state and local taxes based on current laws with simplified deduction, exemption, and tax bracket parameters of the current year. In the projection, tax parameters are adjusted by an inflation assumption provided by you or your financial professional. Future tax laws may be significantly different than current tax laws and may result in higher or lower taxes due than what are reflected within this report. Roth IRA distribution are tax free if made 5 years after the initial contribution to the plan and you are over 59 1/2. Before investing in a 529 plan, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits. RightCapital includes limited accounting for Federal and State Estate Tax with simplified deduction, exemption, and tax bracket parameters of the current year.
8.8 Current Dollars and Future Dollars. The results of RightCapital calculations are in future dollars. To help you compare dollar amounts in different years, results can also be expressed in current dollars by discounting the future dollars by the inflation rate you or your financial professional provides.
9 Liquidation of holdings. This report may include liquidation of holdings, recommended by your financial professional. The transaction cost of liquidation is not included in the analysis. The liquidation will also result in the loss of future earnings.
Source: RightCapital report disclosure, reproduced for the projections in this post. Sections 8.5, 8.9, and 8.10, which cover insurance products and current versus proposed plans, do not apply to this illustration.
Deeper Dives: Related Topics
For more on the planning questions in this case study, explore:
→ Related readRoth Conversions in the 5-10 Year Window Before RMDs → → Related readRoth Conversions and ACA Premiums: The Pre-Medicare Healthcare Cliff → → Related readWhen to Claim Social Security: 62 vs 67 vs 70 → → Related readTax-Efficient Withdrawals: How You Take Money Matters →