I've Saved About $1 Million...Am I Ready to Retire?

Transcript

A lot of people around age 60 hear things like, you can't retire until 65, or you need $3 million saved to even think about retirement. The problem with this advice isn't that it's bad or coming from a bad place. It's that it's entirely incomplete, and sometimes just wrong. I'm Nick George, founder of ClearMind Capital, and we work with people approaching retirement who simply want to know where they stand, what options they have, and how those numbers can support the life they want to live next. In this video, I'm going to show you what that actually means using a real example.

I talk a lot about having a plan, building a financial plan, but if you've never had one built before or seen how that conversation goes, that phrase doesn't mean much. So I want to take you behind the curtain and show you what a real retirement planning conversation looks like at ClearMind Capital.

We're going to meet with Tom and Lisa, both age 60. They have roughly a million-dollar portfolio, they were referred to us by friends, and they're coming in with a simple question, although it can feel like a heavy one: Nick, can we retire? And if not, how far off are we? This is one of the most common questions we get, especially from people who feel like they've done a lot of the right things but still aren't sure how all the pieces fit together. So instead of guessing or relying on rules of thumb, we're going to take Tom and Lisa through a personalized planning experience, designed to bring them clarity so they can make decisions from a grounded, informed place. Not rushed, not forced, not half-baked. We'll look at where they stand today, what retirement is actually going to cost, how they're going to afford it, and most importantly, how a few small changes can dramatically improve the plan.

Quick housekeeping before we jump in. This is for educational purposes only. It should not be taken as personalized financial, tax, or investment advice. The names have been redacted, so we're using fake names, and the numbers have been simplified for the sake of time and to protect privacy. But other than that, this is a real scenario we see all the time. Let's get into it.

The first thing we want to do is take inventory of what Tom and Lisa have built so far. What resources do they have, from a high level? The easiest way to do this is through a balance sheet. Tom is age 60, and he has his own account, the 401(k) at his job, for $482,000. On the other side, Lisa has her 401(k) for $36,000, and also a Roth IRA that Tom doesn't have. Together they have a joint savings account, a joint investment account, and a paid-off home, no mortgage. Together, Tom and Lisa are worth around $1.5 million. For this initial analysis, we're going to exclude the home, and that's intentional. We want to see if the portfolio can stand on its own, so we'll just look at the investable and cash assets in our projections and not include the home. We know the house is there as a potential lever to pull down the road, but we don't want to rely on it from day one to make the plan work. We want to plan conservatively.

Now let's quickly look at income and savings. Tom and Lisa were making $115,000 and $80,000 at their jobs. For version one of this plan, we're going to have Tom and Lisa retire next month, so those incomes drop off. They won't be included in the plan, because we're retiring in January of 2026. Tom was also putting 10% into his 401(k), Lisa was putting 6% into hers, and together they were putting around $500 into a joint investment account. That also won't be included, because we're done saving. We're done making money. We're going to live off our assets. However, we do include Social Security in the income section, because it will eventually be income. Tom and Lisa can file for Social Security between ages 62 and 70. For Tom, we have him filing at 70, the latest possible age, and based on the Social Security statement he sent us, he'll receive around $2,800 a month. If you've never seen a Social Security statement or logged in, you can do so at the website on the screen. For Lisa, we have her filing at full retirement age, which nowadays is 67, and based on her statement she'll receive around $2,100 a month.

Now, what is retirement actually going to cost? Sometimes it can be hard to know what you might need on a monthly basis in retirement. There are rules of thumb, like starting with 80% of the household income you were making, but Tom and Lisa had a pretty good understanding that they'd need $8,000 a month after taxes to run the show. Throughout the conversation, we talked about what they wanted to do. There were still more ideas to form. They talked quite a bit about travel and vacation, so we added a line item and decided to revisit it later.

Now that we have a better understanding of Tom and Lisa's financial picture, we take those inputs and build out a financial plan. And a financial plan isn't set it and forget it. We create a first version and work from there, having conversations with Tom and Lisa and continuing to refine and edit until we have a plan they feel great about. To start, we zoom out and look at their cash flow year after year, split in half. To the left of the line you'll see cash inflows, what's coming in the door, and to the right, cash outflows, what's going out the door. As mentioned, in 2026 we've turned off their paychecks. They're retired, cold turkey, so nothing is coming in the door. But bills still need to be paid. Expenses don't stop. $8,000 a month is around $96,000 a year.

Within the cash flow, we point out a few things to Tom and Lisa. First, the first six years, where you see a bunch of zeros, we call these gap years, because this is the gap we have to fill with the portfolio via withdrawals before Social Security kicks in. Remember, Lisa's Social Security starts at 67. I think her birthday is in September, so she gets a couple of payments, then at 68 a full year's worth, same at 69. At 70, Tom's kicks in, and at 71 they're humming with both Social Security payments coming in. So the first six years are more strenuous on the portfolio until Social Security starts. This number is basically telling us what we'll need to take out of the portfolio to support their retirement. We also inflate expenses year after year, because the cost of living never stays the same. And you'll see the timeline runs out at age 92, that's when we have Tom and Lisa walk the plank. Kidding. It's about a 32-year time horizon, age 60 to 92.

We take this a step further and show Tom and Lisa just the portfolio, because that's really what we're looking at. We want to stress test based on our inputs. At $8,000 a month, retiring next month, how does the portfolio fare? We have that million-dollar starting balance, we take out $96,000, and the portfolio returns about $64,000 via the market, for an ending balance of $972,000 if you do the quick math. We do this every year, throwing in an assumed rate of return to get the portfolio return, and as we go down, we want to see when the ending balance hits zero. It's showing that Tom and Lisa are potentially going to run out of money at age 88. Let's look at this more visually. We have that starting balance of around a million dollars, and year after year we're drawing from the portfolio. Social Security kicks in, which smooths out the timeline and pushes out the longevity, but we're still looking at running out of money at age 88.

This is nothing for Tom and Lisa to panic over, because a few small tweaks can make a huge difference. It's probably not something we'd recommend, but we said, look, let us show you what just working an extra two years for both of you does to the plan. We put 63 in there, because we need two full years of working, so we can't put 62. And what does that do to the longevity of the plan? The purple is the original scenario, running out of money at age 88. That same age, working an extra two years, their portfolio is still at $1.3 million. So not only is that doable, Tom and Lisa, but we're probably overdoing it. You do not get a trophy for being the richest person in the graveyard. Now we have this guardrail, this range Tom and Lisa can work with to customize what they want to do. They know they're not going to retire next month. We just wanted to see if they could. And they came back and said, this is really good to know, Nick, because Lisa doesn't like her job. Tom is happy to go another two years, and Lisa would love to be done and maybe just work part-time for five or so years as a substitute teacher. Great, let's look at what that does. So we say, okay, Lisa, you retire next month if you want, and you'll bring in $25,000 a year for five years as a substitute teacher. Let's check it out.

Not much of a change, right? If anything, it got a little better, because Tom is still plugging away his savings for an extra two years, and we're taking a lot less out of the portfolio in those gap years. These are important years right here. If Lisa is going to continue to work, there's less stress on the portfolio. Tom and Lisa feel good about this plan. Tom's going to work an extra two years, Lisa is going to be done, maybe go be a substitute teacher, but they feel good about doing this. They feel much more confident about it.

So we're going to look at that same table we looked at earlier. Beginning balance, what we're pulling out of the portfolio, the portfolio return, and the ending balance. We're starting at 2028 now. This is what was showing Tom and Lisa running out of money at age 88. That same age, Tom and Lisa, we are almost too healthy. With our new version of the plan, now we're not spending enough. We went from running out of money to dying with too much.

So we go back to Tom and say, remember that conversation we were having around travel and vacation, and we weren't too sure what to do yet because we were unclear on our current capacity? Well, now that we have a better idea of your financial picture, what if we say, okay, we're going to send you an extra $20,000 a year on top of the $8,000 a month for pure travel and experiences, and we're going to do this for 10 years. What does that look like? So for 10 years we're going to go on extravagant vacations. Of course, we're going to eat into a lot of that portfolio principal, but we have the capacity to do so. Tom and Lisa, that is doable for you both in this next chapter.

The conversation evolves, and we continue to share a few things with Tom and Lisa. One is that when we're looking at retirement spending, we can split retirement into three phases: your go-go years, your slow-go years, and people's favorite, your no-go years. The way you spend in retirement is not linear. It's not increasing like we show in the plan, $8,000 a month every year with a 3% increase all the way to age 92. The reality is it's going to change over time.

Another thing we might look at is what's called a Monte Carlo analysis. This is not something we take as gospel or hang our hat on, but what it shares is this: here's what we currently had, running out of money at age 88, versus the changes we made, and here's our new plan. Probability of success can often be miscommunicated. It's not, you have a 60% chance of this happening. It's more, there's a 40% chance we might have to make some changes along the way, which, news flash, we're most likely always going to have to make changes. Life changes. Whether interest rates rise or the market has a bad year, there might be a 40% chance we have to make some changes, because we're not necessarily bulletproofing this plan with guarantees, which lessens risk but also lessens return and portfolio growth.

Last but not least, Tom and Lisa had a few questions about the guidance throughout. Nick, are you going to be with us when we need to enroll in Medicare? Yes, Tom and Lisa, we're going to be right there with you and give you exactly the directions needed to get you set up and enrolled when you both are about to turn 65. Same with Social Security filing. Same with required minimum distributions. Don't worry about a thing. We're going to be right there with you every step of the way.

So, is $1 million enough to retire on? Sometimes yes, sometimes no. As you can see, it depends. It depends on your story, your numbers, what you want to do, your goals, and so on. Hopefully the main takeaway is around those small changes. You saw how dramatic the impact was to the plan if we just worked an extra two years, or did this, or tweaked that. That's where financial planning, that's where the magic is. That's the art. That's the fun part. But we want to make sure we're doing it from a strategic standpoint, not a guessing standpoint.

I hope this was helpful. If you want to look at your situation or go through a similar exercise one-on-one, I'm happy to do so. Please feel free to reach out. We do these all the time, and it's something we love doing, so never hesitate. With that, let's have a great 2026. Thank you all for your support. I appreciate you.

Hosted byNick GeorgeCFP®, ChFC®, CLU®, IWA™FounderView bio →

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