If you’re working in your 50s or early 60s, “do I have enough to retire?” is probably not a hypothetical question; it’s the one that shows up at 2 a.m. You’ve built real assets. You may have a pension or deferred comp on top of a high income. And yet the number that would let you exhale often still feels blurry.
That’s normal, and it’s one of the most common questions we receive as planners. A high income and a healthy balance sheet don’t automatically translate into a clear retirement number because the real answer depends on your spending, income sources, timeline, and how your plan holds up when markets don’t cooperate, not just your account balances today.
This article walks through the three pieces of that answer: setting a target number, mapping your income against your expenses, and stress-testing the plan against the things you can’t predict. It’s general education, not a personalized recommendation; your retirement readiness depends on your specific circumstances, and only a fiduciary advisor can build an answer for your life, not an average one.
Start With a Target Number, But Treat It as a Starting Point, Not a Verdict
The “4% Rule of Thumb” and Where It Comes From
You’ve likely heard some version of “you need 25 times your annual expenses” or “the 4% rule.” Both trace back to real research, and it’s worth understanding what that research actually said, and didn’t.
In 1994, financial planner William Bengen published a study testing how various withdrawal rates would have performed against historical U.S. market returns going back to 1926. He found that, in the worst historical periods he examined, a retiree withdrawing about 4% of a portfolio in the first year of retirement, and adjusting that dollar amount for inflation each year after, could have sustained a diversified stock-and-bond portfolio for at least 30 years (Investopedia’s summary of the Four Percent Rule).
A few years later, a group of finance professors at Trinity University ran a similar analysis across a wider range of withdrawal rates and stock/bond allocations, using rolling historical periods from 1926–1995. Their findings, now known as the Trinity Study, became one of the most cited pieces of retirement-withdrawal research in the industry (Investopedia’s summary of the Trinity Study).
The “25x” shorthand is just the math flipped around: if 4% is a starting withdrawal rate, then a portfolio of roughly 25 times your annual expenses is what supports it (1 ÷ 0.04 = 25).
Why a Rule of Thumb Isn’t a Plan
Here’s the caution that matters: both studies looked backward at historical U.S. market returns. They can’t guarantee how any future 30-year period will unfold, and a 4% (or any other) withdrawal rate is not a promise that your money will last, it’s a historical reference point. Your own safe withdrawal rate may reasonably be higher or lower depending on your time horizon, your portfolio mix, your flexibility to adjust spending, taxes, fees, and how much other guaranteed income (i.e., Social Security, a pension) you have to lean on in a down market.
For an executive with deferred comp vesting on a schedule, a pension with its own payout options, and a portfolio spread across taxable, tax-deferred, and Roth accounts, a single multiple rarely captures the full picture. It’s a reasonable starting point for a conversation, not the conversation itself.
The Spending-Based Approach: Building Your Number From Your Actual Life
A more precise starting point is to build your number from the bottom up:
- Start with today’s spending — not your income, your actual outflow.
- Adjust for what changes in retirement. Some costs disappear (retirement account contributions, payroll taxes, commuting). Others often rise (health coverage before Medicare eligibility at 65, travel, long-term care planning, and — for many in this stage of life — charitable giving or supporting adult children or aging parents).
- Subtract income you’ll still have from other sources (Social Security, pension, part-time or consulting income) to find the gap your portfolio actually needs to cover.
- Apply a reasonable withdrawal framework (like the 4% starting point above, adjusted for your circumstances) to that gap, not your total spending.
This version of the number tends to be more useful than a generic multiple because it reflects your household, not a historical average one.
Map Your Income Against Your Expenses: Cash-Flow Modeling
A target number tells you roughly what you need. Cash-flow modeling tells you whether the money actually shows up when you need it — which, for executives with layered income sources, is often the harder and more valuable exercise.
Inventory Every Income Source
Most pre-retiree executives and nonprofit leaders are working with some combination of:
- Social Security. Your monthly benefit depends heavily on when you claim it. Claiming as early as 62 permanently reduces your benefit; waiting past your full retirement age (67 for most people born in 1960 or later) increases it through delayed retirement credits, up until age 70 (Social Security Administration: early or delayed retirement; SSA: delayed retirement credits).
- A pension, if you have one — with its own choices around single-life vs. joint-survivor payout options.
- Deferred compensation. Nonqualified deferred comp plans generally come with distribution elections that, once made, may be irrevocable, and the funds are usually treated as an unsecured claim against your employer rather than a protected retirement account. Understanding your election windows matters well before you plan to retire.
- Portfolio withdrawals, which are also shaped by tax rules — including required minimum distributions (RMDs). Under the SECURE 2.0 Act, RMDs from most tax-deferred retirement accounts generally must begin at age 73, with that age scheduled to rise to 75 for people born in 1960 or later (IRS: Retirement Plan and IRA RMD FAQs).
Timing Is Often as Important as the Amount
The order and timing of these income sources can matter as much as the totals. Claiming Social Security a few years earlier or later, choosing when to draw down deferred comp, and sequencing withdrawals across taxable, tax-deferred, and Roth accounts can meaningfully change your tax bill and how long your portfolio needs to carry the load, often more than people expect going in.
Map Expenses Realistically, Including the Ones People Forget
A cash-flow model is only as good as the expense side. Beyond routine living costs, it’s worth explicitly mapping: health coverage in the gap years before Medicare, taxes on each dollar of withdrawal (which differ by account type), one-time costs like home renovations or helping family, and long-term care, which most retirement projections underweight.
Stress-Test the Plan, Don’t Just Project It
A single projection, even a careful one, shows you one possible future. Retirement plans that hold up well are generally tested against several.
Sequence-of-Returns Risk: Why the Order of Returns Matters
Two retirees can experience the exact same average annual return over 30 years and end up in very different places, depending on the order those returns arrive in. A retiree who experiences a market downturn in the first few years of retirement, while also withdrawing income, can permanently impair a portfolio’s ability to recover, even if strong returns show up later. This is known as sequence-of-returns risk, and it’s one of the main reasons a portfolio that looked “fine” on an average-return projection can still run into trouble in real life.
This risk is generally highest in the years right before and just after retirement, which is exactly the window many people in their 50s and early 60s are approaching now.
Running Multiple Scenarios Beats a Single Straight-Line Projection
Because the future doesn’t move in straight lines, a more useful test runs your plan through many possible paths, early down markets, prolonged low-return periods, higher inflation, and longer-than-average life expectancy, rather than one tidy average-return line. This is often done through Monte Carlo–style modeling, which generates a range of outcomes and shows how often a plan holds up across them, rather than a single “success” or “failure” answer.
Inflation and the Unknowns You Can’t Fully Control
A 30-year retirement means 30 years of inflation eroding purchasing power, and healthcare costs in particular have often risen faster than general inflation over time. Building margin into a plan, rather than assuming today’s costs stay flat, is part of what stress-testing is meant to catch.
What This Means for You as an Executive or Nonprofit Leader
If your income has several moving parts, deferred comp elections, a pension decision, Social Security timing, and a portfolio spread across account types, no single rule of thumb will fully answer, “Do I have enough?” A cash-flow model built around your actual sources and expenses, then stress-tested against a range of market and inflation scenarios, gets much closer.
It’s also worth being honest that this kind of planning intersects with family and legacy decisions many leaders in this stage of life are still working through: how much to leave, how to support family members, and whether estate documents are up to date.
None of this is a substitute for a plan built around your specific numbers, goals, and risk tolerance. As a fee-only fiduciary firm, Zenith Wealth Partners doesn’t earn commissions on products, which means the conversation stays focused on what actually fits your situation.
FAQ
Is the 4% rule still a good guideline for retirement withdrawals? It can be a reasonable starting point for a conversation, but it’s based on historical U.S. market data and isn’t a guarantee for any individual’s future. Your appropriate withdrawal rate may be higher or lower depending on your time horizon, portfolio mix, flexibility, and other income sources.
How much do I need to retire if I earn $300,000 or more per year? There’s no single figure that applies across incomes; a target number depends on your actual planned spending in retirement, not your current salary. A spending-based, bottom-up estimate is generally more useful than an income-based rule of thumb.
When should I claim Social Security if I’m still working as an executive? It depends on your full retirement age, your other income, your health and family longevity, and your overall cash-flow needs. Claiming early permanently reduces your benefit; delaying up to age 70 increases it. This is a decision worth modeling specifically, not defaulting on.
What is sequence-of-returns risk, and why does it matter more the closer I am to retirement? It’s the risk that the order in which investment returns occur, not just their average, affects how long a portfolio lasts, because withdrawals taken during a downturn can lock in losses. It’s generally most impactful in the years just before and after retirement, which is why stress-testing matters more than a single projection at this stage.
Sources
- William Bengen’s original safe-withdrawal-rate research, as summarized by Investopedia: The Four Percent Rule
- The Trinity Study (Cooley, Hubbard, and Walz), as summarized by Investopedia: The Trinity Study
- Social Security Administration: Retirement Benefits — Early or Delayed Retirement
- Social Security Administration: Delayed Retirement Credits
- Internal Revenue Service: Retirement Plan and IRA Required Minimum Distributions FAQs
Jesse Wideman, CFP® | Zenith Wealth Partners
All written content is for information purposes only. Opinions expressed herein are solely those of Zenith, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.