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When Can I Retire & How Much Can I Spend To Live A Comfortable Life?

By Jake Withnell, CFP®

A lot of people used to think that 4% was a safe withdrawal rate. If you only withdrew 4% of your retirement savings a year, it would be enough to last at least 30 years. This meant that if you needed $120,000 a year to live comfortably in retirement, you could save up $3 million and be set for life. 

But unfortunately, figuring out how much money you need in retirement isn’t this easy. It’s not a straight line formula. You also have to factor in market conditions when you retire, your cost of living, and inflation—all of which are three major factors that greatly impact when you can retire. 

Let’s take a closer look at each of these factors now, so you can see how they impact your retirement plans. 

How Market Conditions Can Impact Your Retirement

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. (1)

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.

How Cost of Living Can Impact Retirement

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 Portland is about 30.8% higher (2) than the U.S. average and around 18% higher (3) than other cities in Oregon. Retire to Honolulu, Hawaii, and your cost of living would be about 77% higher than the U.S. and 46% higher than Portland. 

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. 

How Inflation Can Impact Retirement

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 an average 2% inflation rate each year, (4) the $150,000 a year you live on now will be the equivalent of $223,000 in 20 years, and $272,000 in 30 years. (5)

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.

Need Help Figuring Out When You Can Retire?

At JGP Wealth Management, we like to say that personal finance is, well…personal. There’s no single answer to when you can retire or how much money you need to live a comfortable life. Finding these answers begins with us doing a thorough deep dive into your financial situation and goals, so we can determine what steps you need to take to get where you want to be.

If you’d like help figuring out when you can retire and how much you’ll need to do it, reach out to me at 503-446-6450, email jwithnell@jgpwealth.com, or schedule an introductory phone call online. I’d love to help you figure it out.

About Jake

Jake Withnell is a financial advisor at JGP Wealth Management, an independent, fee-based financial advisory firm in Portland, Oregon. Jake is known for going the extra mile for his clients and for his passion for working tirelessly to help his clients find solutions to their financial concerns so they can confidently live out the life they want. He prioritizes listening and understanding as the foundation of his relationships with his clients, and his highest hope is that they can spend more of their time and energy on their passions knowing he is watching over their financial future. Jake specializes in serving business owners, Nike executives, and retirees, and plays a key role in JGP’s portfolio management process, building and analyzing financial models, and conducting client cash flow analyses. 

Jake graduated from Eastern Washington University with a bachelor’s degree in professional accounting and finance. He is a Certified Public Accountant (CPA) and a CERTIFIED FINANCIAL PLANNER® (CFP®) professional. Jake’s claim to fame is his time playing tight end for the Eastern Washington University Eagles, all while earning four-time Big Sky Conference First Team All-Academic honors! Jake values giving back to his community and does this by volunteering with the Children’s Cancer Association, Family Building Blocks, and New Avenues for Youth. In his free time, Jake takes advantage of the many outdoor activities the Northwest has to offer, such as trail running, mountain biking, and hiking. He loves traveling and spending long weekends at his family beach house in Seaside, OR. To learn more about Jake, connect with him on LinkedIn.


(1) https://www.blackrock.com/cl/literature/investor-education/sequence-of-returns-one-pager-va-us.pdf

(2) https://www.bestplaces.net/cost_of_living/city/oregon/portland

(3) https://www.bestplaces.net/cost_of_living/city/oregon/portland

(4) https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093 

(5) https://smartasset.com/investing/inflation-calculator