If you’ve been planning for retirement, chances are you’ve heard this golden rule: You need at least $1 million to retire comfortably. But is that true?
The short answer: not necessarily.
At Root Financial, we’ve worked with people retiring with far more—and far less. What matters more than any round number is how you define comfort, what income sources you’ll rely on, and how well your expenses align with your goals. In this post, we’ll unpack the real drivers of retirement readiness and why chasing a $1 million target might actually set you back.
Retirement Isn’t About Net Worth. It’s About Cash Flow.
Let’s start with a simple story.
James recently spoke with a neighbor in Southern California. After learning James hosts a retirement podcast, the neighbor said he didn’t think it would apply to him—after all, he didn’t have anywhere near $3 million. But as they talked through his situation, it became clear: this individual could retire very comfortably with only about $300,000 saved.
How? His monthly retirement income would come from a pension, Social Security, and rental property income. Plus, he and his wife planned to retire debt-free with a modest lifestyle.
In other words, he had built the right retirement equation for his life—not someone else’s.
Three Levers That Matter More Than Your Portfolio Balance
So, what really determines your ability to retire? We like to break it down into three simple components:
- Your expenses in retirement
- Your non-portfolio income sources (like Social Security, pensions, or rental income)
- The gap your portfolio needs to fill
Let’s work through each of these with examples.
1. Know Your Lifestyle Number
This is the foundation of every great retirement plan: What do you want to spend each month?
Some couples live happily on $3,000 per month. Others need $10,000 to support travel, hobbies, or a second home. There’s no universal right answer—only what’s right for you.
And here’s the secret: once you understand your expenses, you can build your plan around how to cover them. That’s far more useful than picking an arbitrary savings goal.
2. Count On Your Income Floor
Next, look at your guaranteed income streams:
- Social Security
- Pension payments
- Rental income
- VA or disability benefits
These are your A-team. They show up every month, rain or shine, and provide consistency that your portfolio doesn’t always guarantee. Think of them as your income floor—the minimum you can count on.
Let’s say you want to spend $6,000 a month in retirement. If your combined Social Security and pension give you $5,000, your portfolio only needs to provide the remaining $1,000. That’s a game-changer.
3. Let Your Portfolio Fill the Gap (Not Drive the Whole Plan)
Once you know the gap your income sources don’t cover, you can figure out how much your investments need to provide.
In the example above, a $1,000/month shortfall equals $12,000 per year. Using a simple 4% withdrawal rule (not perfect, but helpful for rough math), you’d only need about $300,000 in your portfolio to generate that income.
Compare that to someone else who might want to spend $8,000/month with no pension and lower Social Security. Their portfolio needs to carry a much heavier load—which means they might actually need $1 million or more.
The takeaway? Your portfolio isn’t the starting point—it’s the supporting player. The size of your portfolio should reflect the size of the gap it needs to fill.
Retirement Planning Is Personal, Not Prescriptive
Here’s another real-world example:
A retired veteran recently shared his plan with us. He had full disability benefits from his military service, Social Security, and a paid-off home. His expenses? Just $3,000 a month.
With no debt, no mortgage, and no desire to travel extravagantly, his benefits covered his lifestyle easily—and he continued saving money each month. His investment portfolio? Roughly $250,000, untouched.
The lesson? Your desired lifestyle, values, and financial habits shape your retirement far more than any headline number.
The Myth of the Magic Number
There’s comfort in simplicity. That’s why the “$1 million rule” shows up in so many headlines. It promises an easy benchmark to shoot for. But here’s the problem:
- If your actual needs are much lower, you could end up overworking and under-living.
- If your needs are higher, the $1 million goal might give you a false sense of security.
Retirement isn’t about reaching a number. It’s about reaching a reality where your lifestyle is funded sustainably—for as long as you need it.
A Shift in Mindset: Net Worth vs. Income Flow
When people say, “You need $X to retire,” they’re often talking about net worth. But we live off of income, not wealth.
You can’t spend a portfolio. You spend the income your assets generate.
That’s why we encourage clients to shift their focus from growing net worth to engineering reliable, flexible income streams that support their lives—now and in the future.
The Hidden Leverage in Lower Expenses
One of the most powerful—and underappreciated—levers in your retirement plan is your spending.
Let’s say your desired spending is $6,000/month, and you’re receiving $5,000 from Social Security and a pension. You’d need $300,000 in your portfolio to cover the remaining $1,000 (again, using the 4% rule).
But what if you reduced spending to $5,000? Now, your guaranteed income covers 100% of your lifestyle. You could retire with zero reliance on your portfolio.
You don’t have to cut spending dramatically or sacrifice joy. But thoughtful lifestyle choices—downsizing, moving closer to family, eliminating debt—can buy you time, freedom, and peace of mind.
How to Find Your Retirement Number
Forget what the headlines say. Your retirement number should be built around your life, not someone else’s projection. Here’s how to start:
- Define your lifestyle goals: What does a fulfilling retirement look like for you?
- Add up your fixed income: Include Social Security, pensions, and rental income.
- Calculate your monthly shortfall: What will your investments need to cover?
- Work backward from there: Use a sustainable withdrawal rate (e.g. 4%) to estimate your ideal portfolio size.
It’s not about the biggest number—it’s about the right number for your plan.
Final Thoughts: What Actually Matters in Retirement
At Root, we’ve helped clients retire with portfolios ranging from $250,000 to several million dollars. The difference between a confident transition and constant anxiety usually isn’t money—it’s mindset.
The people who retire well:
- Understand their expenses
- Maximize income sources
- Keep their lifestyle aligned with what matters most
And most importantly, they plan on purpose—not out of fear or comparison.
If you’re not sure where to begin, or if you’ve been holding on to a headline-driven savings target that doesn’t reflect your reality, we’d be honored to help you walk through the numbers.
Because retirement shouldn’t feel like guesswork. It should feel like something you’ve built—for yourself.
Curious if your number is actually the right number? At Root Financial, we help you build a life-first retirement strategy—one that aligns income, investments, and purpose. If you’re ready for a clear look at what’s possible, we’re here to help.
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.
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. Nothing in this content should be interpreted as a recommendation to take a specific tax position or legal action.
This content may include discussions around advanced financial planning strategies such as Roth conversions, backdoor Roth IRAs, tax loss harvesting, charitable giving, estate planning tactics. These concepts are general in nature and are not personalized advice. 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.
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.