There is a number people want me to give them when we talk about retirement.
Is it $1 million?
$2 million?
$3 million?
I understand the appeal. A number gives you something concrete to work toward. And in the Bay Area, where housing costs and incomes make almost any national rule of thumb feel disconnected from reality, it's especially tempting to want a local number.
But I've sat with people who had significant assets and weren't ready to retire, and people with considerably less who were.
The difference wasn't the size of the account. It was what the money needed to do.
The amount you need to retire is the amount required to support the life you actually plan to live, after accounting for the income you'll have coming in and the risks the plan needs to survive.
Not as catchy as "you need $2 million." Much more useful.
Here's how I think about it.
1. Start With What Your Life Actually Costs
Before I can tell someone whether they can retire, I need to know what it costs to be them.
Not what they think they should spend. What they actually spend.
Housing. Travel. Food. Cars. Helping adult children. Healthcare. Property taxes. Gifts. Home repairs. The weekend trips that somehow never make it into anyone's budget.
This number matters enormously, because retirement is ultimately an income problem. If one household needs $8,000 a month after taxes and another needs $15,000, they don't need the same portfolio just because they happen to be the same age.
It's also why national retirement averages aren't particularly useful for someone living in San Ramon, Danville, Dublin, Pleasanton, or Walnut Creek. The cost of the life you're trying to maintain matters far more than the average retiree's spending.
Your retirement number starts with your life, not somebody else's rule of thumb.
2. Separate Your Spending From What Your Portfolio Has to Replace
Your investments may not need to provide every dollar you spend.
Depending on your situation, retirement income might also come from Social Security, a pension, rental income, part-time or consulting work, business income, or deferred compensation.
As an illustration, say a household wants $12,000 a month to support its lifestyle. That's $144,000 a year. If Social Security and a pension eventually provide $60,000 of it, the portfolio isn't responsible for producing the full $144,000. It's responsible for the gap, plus taxes, inflation, and whatever else the plan has to absorb.
That's a very different calculation, and it's why I don't like multiplying a salary by some number and calling it a retirement goal. You don't need to replace your salary.
You need to fund your spending. Those are rarely the same figure.
You may also have run across the four percent rule, the idea that you can withdraw roughly four percent of your portfolio each year. It's a useful starting reference and a poor plan. It assumes level spending in a life that isn't level, and it says nothing about which accounts the money comes from or what the tax bill looks like.
3. Housing Can Change the Entire Calculation
In the Bay Area, I want to know about the house early.
Do you own it outright? Are you carrying a mortgage into retirement? Are you planning to stay? Would you consider downsizing, or moving somewhere less expensive? Do you own other property?
A retiree with a paid-off home in San Ramon has a very different income need from someone making a large mortgage payment on a similarly valued house.
And equity doesn't automatically solve a cash flow problem. A $2 million house can make your net worth look wonderful on paper while producing exactly zero dollars toward groceries. Unless you plan to sell it, borrow against it, or otherwise access that equity, I don't treat the value of your home as retirement spending money.
There's a wrinkle here that's specific to California and easy to miss. If you've owned your home for a long time, Proposition 13 means your assessed value, and therefore your property tax, may be far below what the house is actually worth. That low tax bill is part of what makes staying affordable, and it doesn't automatically follow you.
Proposition 19 lets qualifying homeowners who are 55 or older transfer their existing property tax base to a replacement home anywhere in California, and it can generally be used up to three times. That's a meaningful planning consideration for anyone weighing a move. It also changed what happens when a home passes to children, which is worth understanding if you expect to leave the house to family. Both are worth reviewing with your tax and legal professionals, because the details matter and they apply differently to different situations.
Net worth and retirement income are related, but they are not the same thing.
4. The Plan Has to Last, and Its Most Expensive Years Come Last
We know when income from work stops. We don't know how long the money has to last.
For women this deserves particular attention, because women tend to live longer than men on average. A woman retiring in her early sixties may need her plan to work for thirty years or more. That changes almost everything: how much can reasonably come out of the portfolio, how much has to stay invested for growth, how much cash should be available, and what happens if inflation runs hotter than expected or one spouse outlives the other by a decade.
The other half of a long retirement is that some of the costs we’re least able to predict may arrive near the end.
I don't like burying healthcare inside a general spending estimate. Before Medicare, health insurance can be a substantial expense, particularly for someone retiring before 65. After Medicare begins, healthcare doesn't become free. There are premiums, supplemental coverage, prescriptions, dental and vision, and out-of-pocket costs.
Then there's long term care, which is a separate question. Not everyone will need extended care and nobody knows their own future, but ignoring the possibility doesn't make the risk go away. For a couple, I especially want to understand what the plan looks like if one spouse needs significant care while the other is still running the household. That's a different financial problem from adding a line to a budget.
The goal isn't to have enough money to retire. It's to have a plan that keeps working long after you have.
5. Taxes Don't Retire When You Do
A $1 million Roth IRA and a $1 million traditional IRA are not the same amount of spendable money. Neither is $1 million in a taxable brokerage account.
Where your wealth sits matters. Withdrawals from different account types carry different tax consequences. Social Security may be taxable depending on your circumstances. Required distributions can push taxable income higher later in retirement. Selling investments creates gains.
And the order in which you draw from different accounts can matter a great deal over a retirement measured in decades.
This is especially true around here, where a working lifetime at a public company often leaves someone holding a large position in a single stock. A concentrated holding is a tax question, a risk question, and a retirement income question at the same time, and it usually needs a plan of its own.
So I want to see where the money is, not just the total at the bottom of the statement. The headline number tells me a fraction of the story.
6. The First Few Years Matter More Than People Realize
One of the real risks in retirement is a significant market decline shortly after you stop working.
While you're employed, a downturn is uncomfortable but you're generally not selling investments every month to pay bills. Retirement changes that. If you're withdrawing from a falling portfolio, you're selling more shares to produce the same income, and those shares aren't there to participate when markets recover.
Which is why I don't think retirement planning should begin with "what return can we get?"
It should begin with: what needs to come out of this portfolio, and when?
Once I know that, we can decide what stays liquid, what stays invested for the long term, and how much risk the plan can actually afford to take.
7. A Projection Isn't a Prediction
When I build a retirement plan, I'm not predicting what markets will return in 2037 or what inflation does in 2044. Nobody can.
What we can do is test the plan.
What happens if you retire two years earlier? If you spend more on travel for the first ten years? If Social Security starts later? If markets have a rough stretch right at the beginning? If you help a child buy a house? If the business sells for less than you hoped? If you live to 95?
That's where planning earns its keep. We're not looking for one correctly predicted future. We're working out which decisions make your plan stronger and which ones put pressure on it.
So, How Much Do You Actually Need?
I wish there were a number I could put here. There isn't.
Two people can each have $2 million and be in completely different positions. One has a paid-off house, modest spending, Social Security and a pension. The other has a mortgage, ambitious travel plans, no pension, and family members she expects to help support.
Same portfolio. Completely different retirement.
So if you're asking whether you have enough, I'd start with five questions:
What does your life actually cost?
What reliable income will you have besides your investments?
What assets do you have, and where are they held?
What major expenses or responsibilities follow you into retirement?
How much flexibility do you have if things don't unfold the way you expect?
Once those have answers, the number starts to mean something.
Retiring in the Bay Area
Living here can make retirement planning feel intimidating, because the numbers are bigger.
But a high cost of living doesn't mean you can't retire here. It means the assumptions have to be yours.
For someone in San Ramon, Danville, Dublin, Pleasanton, Walnut Creek, or elsewhere in the Tri-Valley and East Bay, the plan may involve a valuable home, a low property tax basis worth protecting, significant retirement assets, a business, stock compensation, and a life you don't particularly want to shrink just because you've stopped working.
That's fine. That's the actual planning problem.
The goal of retirement planning isn't to tell you what your retirement should look like. It's to tell you what the retirement you want requires, and whether the financial life you've built can support it.
If you're wondering whether you have enough, that's a question we can put real numbers behind.
About Mackie Chaudhry, CFP®
Mackie Chaudhry, CFP® is the founder of Soluna Wealth Planning in San Ramon, California. Soluna provides comprehensive financial planning for women and families, with a special focus on women business owners and professionals.
Mackie helps clients bring the pieces of their financial lives together: cash flow, investments, retirement planning, tax considerations, insurance, estate planning, and the major decisions in between. Her approach is warm, organized, and judgment free.
Soluna Wealth Planning serves clients in San Ramon, Danville, Dublin, Pleasanton, Walnut Creek, throughout the Tri-Valley and East Bay, and beyond.
The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Hypothetical examples are for illustrative purposes only and do not represent the experience of any particular individual.
Cetera Investors is a marketing name of Cetera Investment Services. Securities and Insurance products are offered through Registered Representatives of Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), Member FINRA, SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Cetera is under separate ownership from any named entity.