Many Americans approaching retirement ask a version of the same question: Do I have enough to retire? It is a question financial planners hear more than any other, and the answer is rarely as simple as comparing your savings balance against a chart or rule of thumb.
In a recent conversation, Dana Anspach, founder of Sensible Money, explained why common retirement savings benchmarks can provide a starting point, but not a full picture.
The only way to know with confidence whether you are ready to retire is to evaluate your income sources, spending needs, tax situation, investment allocation, and lifestyle preferences within a structured retirement income plan.
Key takeaways
- Savings benchmarks are helpful, but limited. They provide direction, not a final answer.
- A retirement plan must be personalized. Spending, taxes, Social Security timing, and account structure all affect outcomes.
- Behavior and comfort level matter. Retirement income planning is about psychology as much as finance.
- A financial planner can provide meaningful value. Particularly for those who do not want to manage complexity themselves.
- Peace of mind increases after planning. The process reduces uncertainty and anxiety about money.
Below is an edited for clarity and brevity transcript of the conversation with Anspach.
Robert Powell: “Can I afford to retire?” is perhaps the most commonly asked question that financial advisers receive. And here to talk with me about how she answers that question is Dana Anspach from Sensible Money. Dana, welcome.
Dana Anspach: Hi, Bob. Great to be here. And yes, that is probably one of the most common questions: how do I know if I can retire? How much money do I need to retire? What will it cost me to retire? It comes in all different forms, but it is definitely a popular topic.
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The limits of simple savings targets
Robert Powell: Before we get into how you answer that question, a number of mutual fund companies publish savings benchmarks showing how much people should have saved at different ages. T. Rowe Price, for instance, says that at age 30, you should have about 0.5 times your salary saved, and by age 65, about 11 times. Fidelity has a similar guideline suggesting 10 times your salary by age 67. How useful are these rules of thumb?
Dana Anspach: I think all signposts that point you in the right direction can be useful. They can help someone gauge whether they are generally in range. If someone is 55 and sees that they may need to accumulate more, that can be helpful guidance.
Related: How to get the maximum Social Security check in retirement
But if someone looks at the guideline and they are not anywhere near those numbers, the result might be discouragement. And that is not helpful.
These signposts also skip a lot of real-life factors:
- Expected inheritance, in cases where it is quite certain
- Real estate holdings or ownership of a business
- A pension
- Differences in lifestyle expectations
So the simple “10 times salary” guideline is just a broad starting point. It should not make someone feel hopeless or overconfident. The reality is far more nuanced.
Why personal factors matter
Some people have most of their wealth in real estate, or their spending needs are lower, or they will receive a pension. Others may want to spend more early in retirement knowing expenses will decline later. All of those change the picture.
How to conduct a thorough retirement analysis
Robert Powell: So when someone asks, “Can I afford to retire?” how do you answer that?
Dana Anspach: We answer it very thoroughly. We request a lot of detailed financial data. For example, if someone has a taxable brokerage account, we need the cost basis, not just the balance. That determines how withdrawals will be taxed and whether there are opportunities for realizing gains at lower tax rates.
We also look carefully at the order in which accounts will be drawn down, the expected tax impact of withdrawals, and how that aligns with Social Security timing and other income.
Behavior and preferences matter
Some people want a “spend more now” plan to maximize their active retirement years. Others need to see their account balances remain stable over time to feel financially secure. A good plan reflects both math and psychology.
DIY vs. working with a planner
Robert Powell: So someone might start with the savings guidelines, but to really feel confident, they should likely work with a planner?
Dana Anspach: Yes. Some people love spreadsheets and analysis, and they may be comfortable doing a lot of this themselves. Others are natural delegators and want a retirement “paycheck” plan they can rely on without managing the numbers day to day.
For those people, the value of working with a planner is very high.
Can AI help?
Robert Powell: What about AI tools for planning?
Dana Anspach: AI is evolving quickly. But general models still produce incorrect answers too often. What worries me is that many people may not be able to tell when the answer is wrong. So at this stage, AI can assist, but it should not replace professional judgment.
The Peace of Mind Benefit
Dana Anspach: One of the most important benefits of going through a planning process is peace of mind. Even people who fear looking at the numbers usually feel relief once they have a clear plan.
Robert Powell: Fritz Gilbert once said he worried about money 90 percent of the time before retirement and only 10 percent afterward once he had a plan in place. And that is the goal.
