Talley Tax

    How do I know if I can afford to retire?

    David TalleyUpdated December 21, 2025

    Quick Answer

    Run a detailed projection of income sources (Social Security, pensions, investments) against expenses through age 95+. Include inflation, healthcare cost increases, and taxes. A general rule: you can likely withdraw 4% of your portfolio annually. But the real answer requires knowing YOUR specific situation—fixed expenses, lifestyle goals, legacy wishes, and contingency buffers.

    This is the question that keeps people up at night. And honestly? Most people don't have a good answer because they've never actually run the numbers.

    The fear I see constantly: It isn't about dying broke. It's about locking into a life that feels smaller than what you expected. Retirement is somewhat permanent—you might not get back to the income level you had. That uncertainty creates paralysis.
    The real calculation: 1. What are your income sources? Social Security (get your statement), pensions, rental income, investment withdrawals 2. What are your expenses? And I mean detailed—not "I think we spend about $6,000/month" 3. How long do you need this to last? Plan to 95. Seriously. 4. What's your withdrawal rate? The classic "4% rule" is a starting point, but it's not gospel
    What most projections miss: - Healthcare costs rise faster than general inflation - The first 5-10 years of retirement are often MORE expensive (you're active, traveling, doing things) - Tax planning during retirement (withdrawing from the right accounts in the right order) - One spouse living longer than the other (what changes?)
    The part that matters most: What do you actually want to DO in retirement? If you can't answer that with specificity, no amount of math will make you feel ready.

    I spend hours with clients talking about where they eat, where they travel, when they see their grandkids, where those grandkids sleep when they visit. Because THAT tells us what the budget actually needs to be.

    The exhale moment—when someone truly feels confident they can retire—comes from clarity on both the numbers AND the vision.

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