You’ve probably asked the question: What would it take to spend $10,000 every month for the rest of my retirement? For some, that number seems high. For others, it’s the baseline of a comfortable lifestyle. But regardless of your personal target, the framework for answering this question is the same.
In this post, we’ll walk through the three biggest factors that determine how much you actually need in your portfolio to support a $10,000/month retirement. (Spoiler: it’s probably not as much as you think.)
A Starting Point: The 4% Rule
Let’s begin with the classic rule of thumb: the 4% rule. It says that if you withdraw 4% of your portfolio each year, you’ll likely make it through a 30-year retirement without running out of money.
If you want to spend $10,000 per month, that’s $120,000 per year after taxes. Assuming you need to withdraw $144,000 before taxes to cover that, here’s the math:
- $144,000 ÷ 0.04 (4%) = $3.6 million
That’s the ballpark number you’d need to withdraw 4% annually and generate enough income to net $10,000/month.
But that’s only the beginning.
Three Factors That Shift the Number
Most people won’t need exactly $3.6 million. Why? Because real-life retirement isn’t one-size-fits-all. Your specific number depends on three powerful factors:
1. Other Income Sources
Social Security, pensions, rental income, annuities, or part-time work—any income that’s not coming directly from your portfolio reduces how much your portfolio needs to do.
Let’s say you’re receiving $2,500/month in Social Security. That’s $30,000/year your investments don’t need to generate. When we rerun the numbers in our planning software, the portfolio requirement drops significantly—from $3.6 million to around $2.88 million for the same lifestyle.
That’s nearly a $720,000 difference just from a modest Social Security benefit.
The takeaway? The more income sources you have, the less you need saved.
2. Account Type and Tax Efficiency
Where your assets are held matters as much as how much you have. Drawing income from different types of accounts has different tax consequences.
Take our example client, Roger. If his $2.88 million is all in a traditional IRA, withdrawals are taxed as ordinary income. But if his money is in a Roth IRA, those withdrawals are tax-free.
What’s the impact? Our analysis shows that if all of Roger’s assets were in a Roth IRA, he could maintain the same $10,000/month lifestyle with just $2.1 million—a $780,000 swing from the traditional IRA scenario.
Why? Because less money is lost to taxes. More of each dollar withdrawn goes toward spending, not the IRS.
The takeaway? Asset location can be just as important as asset amount.
3. Withdrawal Rate, Investment Strategy, and Longevity
The third major factor is your withdrawal rate, which is influenced by:
- How you’re invested
- How long your retirement needs to last (life expectancy)
For example, if Roger has all his money in cash, his withdrawal rate must be extremely conservative—because the money isn’t growing. But with a diversified portfolio (e.g., 60% stocks, 40% bonds), his assets are growing even as he draws from them. That allows for a higher, sustainable withdrawal rate.
Life expectancy matters too. If you retire at 75 instead of 65, your money only needs to last 20 years, not 30. That gives you more flexibility.
In Roger’s case, simply pushing retirement to age 75 raised his plan’s probability of success from 70% to 95%—with the same portfolio size.
We also found that dropping his portfolio from $2.1 million to $1.6 million (when retiring at 75) still kept his probability of success above 70%.
These scenarios illustrate that you can’t just pick a withdrawal rate out of thin air. If you attempt to withdraw 10% annually starting at age 65, chances are you’ll run out of money long before retirement ends. Instead, a sustainable rate must reflect your portfolio growth and the number of years it must last.
The takeaway? A thoughtful withdrawal strategy can help you retire earlier, spend more, or save less.
Visualizing the Tradeoffs
The beauty of using financial planning software is seeing the impact of each variable in real time. We modeled Roger’s case multiple ways to normalize outcomes (aiming for 70–75% success probability) and discovered:
- With no Social Security: $3.6M portfolio needed
- With $2,500/month Social Security: $2.88M
- With Roth IRA structure: $2.1M
- Retiring at age 75 with Roth IRA: $1.6M
That’s a $2 million difference across plausible scenarios—all while preserving the same monthly lifestyle.
Pulling It All Together
At first glance, $3.6 million might seem like the magic number to spend $10,000/month. But once you factor in:
- Social Security or other income
- Tax-efficient account structures
- Investment growth and retirement age
…your true number could be far lower.
For many people, it might be $2.8M, $2.1M, or even less.
And if your goal isn’t $10,000/month, that’s okay too. Whether your number is $5,000 or $15,000, the framework is the same.Want to Run Your Own Numbers?
Want to Run Your Own Numbers?
The truth is, no blog post or video can fully personalize these calculations. That’s why we created the Retirement Planning Academy—so you can access the same tools we use with our clients.
You’ll be able to:
- Model out your own income needs
- Plug in your Social Security and other income
- See how taxes and account types affect your plan
- Explore real tradeoffs in real time
If you’re ready to move from guesswork to clarity, visit Root Financial Partners to learn more.
The information presented is for educational and informational purposes only and should not be construed as personalized investment or financial advice. The content discusses general retirement planning strategies and is not intended to recommend any specific course of action for any individual.
Examples provided are hypothetical and for illustrative purposes only. They do not reflect any specific client situation and should not be relied upon for investment decision-making. Past performance of investments is not indicative of future results. All investing involves risk, including the potential loss of principal.
This content may also include hypothetical or forward-looking performance examples, including Monte Carlo simulations. These are intended to illustrate concepts and do not reflect actual investment results or guaranteed outcomes. Assumptions used in simulations may not reflect real-world market conditions or client behavior. Actual results may vary significantly.
Social Security claiming strategies involve a number of variables, including life expectancy, portfolio returns, tax considerations, and personal circumstances. Decisions regarding Social Security benefits should be made in consultation with your financial advisor, taking into account your full financial picture.
This content may include discussions around advanced financial planning strategies such as Roth conversions, tax-efficient withdrawals, or Social Security optimization. These concepts are general in nature and are not personalized advice. Suitability for these strategies depends on your individual tax situation, income, age, investment profile, estate plan, and other factors. Actions related to these strategies may trigger tax consequences or legal implications. Always consult with your CPA or attorney to assess suitability based on your personal financial circumstances.
Root Financial Partners, LLC provides tax planning as part of its financial planning services. However, we do not provide tax preparation services, represent clients before the IRS, or offer legal advice. Clients should consult their CPA or attorney before implementing any tax or legal strategies discussed.