Mona’s Retirement Path

Quick story, that I thought might be helpful to a few of you:

Mona, 53 years old and in the rat race with a large fortune 500 company.

During a recent conversation she stated that she and her friends often discuss how they’ll never be able to retire and will have to work forever.

Me: “Mona, do you actually know how much you would need to retire?”

Mona: “I have absolutely no idea.  I just know that I don’t have enough.”

Step One

How much money does Mona need this month if today was the first day of her retirement?

She shared with me that her lifestyle was fairly modest and that she’d need $5,000 per month.

At age 65, her Social Security payment is projected to be about $2,000 per month.

This means that she would need $3,000 from her investment portfolio in retirement.

Step Two – Inflation

We needed to account for inflation.  A 3% inflation trendline: $3,000 today turns into $4,300 per month in twelve years.

Step Three – Retirement Need

If you needed $4,300 per month, how big would your portfolio need to be?

We believe a great starting point is using the 4% withdrawal method.

It’s a straightforward calculation: We take the annual amount needed from the portfolio ($4,300 * 12 months = $51,600) and divide it by 4%, which equates to $1,290,000.

The Good News

At this point, Mona has a number.  This is progress.

The Bad News

Mona feels that she will never be able to get to this number.

The Process Continues…

Mona currently has $350,000 invested for retirement.  Her 401k contributions equal $20,000 annually (her contributions plus the employer match).  If she averages a 7.8% annual return, in 12 years she will have…


Mona is a lot closer than she thought!

I told Mona she only needed to  need to invest only an additional $236 per month to get to $1,290,000.

I can’t begin to tell you how relieved that she was.

For far too long, Mona avoided having this conversation because of the watercooler conversations that she had with friends and colleagues.

But for the first time, Mona not only felt that she could retire, but actually retire to a life that she loved and was excited about!

The financial planning process provides clarity.

If you or someone you’re close to could use help aligning their finances and establishing a financial plan, please reach out to us, we’re accepting new clients and eager to help. 


IMPORTANT: These illustrations and outcomes are dependent upon variables that are largely beyond our control.  For example, we are assuming that inflation is 3% and investment returns are 7.8%.  Actual outcomes will vary.  This is why it’s imperative to engage in ongoing financial planning with a professional to make plan corrections and updates as needed.

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