If you’re in your early 60s with a few million dollars saved for retirement, you’ve probably started to ask the big questions:
“Is now the time to retire?”
“Should I wait until 65?”
“What’s the right decision for me?”
These are simple questions—but the answers have huge implications for your financial security and your quality of life in retirement.
Today, I want to walk through a real case study that shows how small adjustments can make a big difference.
Meet Michael and Lisa
Michael and Lisa are both 62. Between their 401(k)s, IRAs, and a joint brokerage account, they’ve saved roughly $2 million for retirement. They also own their home, with about $900,000 of equity.
They’re asking the same questions many people ask at this stage: “Can we retire comfortably, and when?”
Their first thought was to retire at 65. That feels traditional—Medicare starts, and it’s the age most people think of as “normal” retirement. But as we’ll see, what feels traditional isn’t always optimal.
Understanding Their Spending
Michael and Lisa’s current monthly expenses are about $14,000, which includes everything from daily living costs to travel.
- Core expenses: $10,000/month
- Travel budget: roughly $4,000/month (around $50,000 per year)
If you’re reading this, don’t get hung up on their numbers. Whether your expenses are $4,000 or $14,000 per month, the framework is what matters — how income, spending, and timing interact to create a sustainable plan.
In addition to those lifestyle costs, we also have to consider medical expenses.
If they retired before Medicare, we’d plan for around $9,600 per person, per year for private health coverage. Once Medicare begins at 65, that number drops — though we still estimate around $4,000 per year in out-of-pocket costs.
Their Income Picture
For now, both Michael and Lisa are earning healthy salaries. Once they retire, those paychecks stop. At age 70, they’ll each begin Social Security benefits:
- Michael: $4,000/month
- Lisa: $3,900/month
They might receive an inheritance in the future, but for this plan, we’re assuming zero. It’s better not to build a plan on assumptions that aren’t guaranteed.
They’re each saving about 10% into their 401(k)s. The real question: Are they on track?
The Cash Flow Reality Check
Cash flow is the heartbeat of any retirement plan. The fundamental question is this: Do you have enough income flowing in to meet your expenses going out?
When we look at Michael and Lisa’s plan, we see that for the next few years, their salaries cover all expenses. But once they retire, that income disappears until age 70, when Social Security begins.
From 65 to 70, they’ll rely entirely on their portfolio to fund their lifestyle — pulling around $250,000 per year from their investments.
That number might sound alarming, but it’s a reality for many retirees in the gap years between work income and Social Security.
The 4% Rule—and Why It’s Not the Whole Story
A lot of people think about retirement withdrawals using simple rules of thumb: “Can I take 4% per year?” or “Can my portfolio generate enough income forever?”
But real life isn’t that consistent.
For Michael and Lisa, their withdrawals are heavy in the early years—and then drop almost in half once Social Security starts and their mortgage is paid off.
That’s normal. Spending isn’t linear, and neither are income sources. The key is understanding how those moving parts interact over time.
The First Look: Retiring at 65
When we model retirement at 65, here’s what we find:
Their portfolio—roughly $2 million today—grows for a few years as they keep saving. Once they retire, the withdrawals begin. Even with disciplined spending, their assets steadily decline and are projected to run out sometime in their 80s.
That’s not an outcome anyone wants. And remember, this doesn’t even account for a major market downturn—something that’s very possible over a 25- to 30-year retirement. Their probability of success (meaning, the likelihood their plan sustains their lifestyle for life) was only around 24%. Clearly, not enough confidence to say, “We’re good to go.”
Option 1: Work a Few More Years
The first thing people often think is, “Well, we’ll just work longer.” So we modeled that. What if they both retire at 68 instead of 65?
That change—just three more years—had a major impact. Their probability of success jumped from 24% to 65%. Financially, that looks great. But what’s the trade-off?
Those are three years of health, energy, and vitality that they’ll never get back. The balance between being financially secure and having the freedom to enjoy life is a deeply personal one.
Option 2: Spend Smarter, Not Longer
Now let’s look at another adjustment — one that doesn’t require working longer. Remember that $14,000 per month budget? We noted that $4,000 of that was for travel.
When asked, “Do you think you’ll still spend $50,000 per year on travel in your late 70s or 80s?” — the answer was obvious: probably not. So we modeled travel spending for just the first 10 years of retirement, tapering off after that.
Here’s what happened:
- Their lifestyle for the first decade didn’t change at all.
- After year 10, expenses dropped naturally.
- Their probability of success jumped to 65% — the same as if they had worked three extra years.
In other words, a more realistic spending pattern had the same financial benefit as delaying retirement.
Understanding the “Retirement Spending Smile”
This pattern—higher spending early on, then gradually tapering — isn’t unique. Economists call it the retirement spending smile.
Spending tends to rise with inflation, but retirees often don’t keep up one-to-one with inflation because they simply do less over time.
You can think of retirement in three loose phases:
- The Go-Go Years: Active, travel-heavy, full of experiences.
- The Slow-Go Years: More home-based, less frequent big trips.
- The No-Go Years: When health or mobility begin to limit activity.
Instead of assuming a flat 3% inflation increase on all expenses forever, we modeled what happens if their expenses grow at 2% per year instead.
That small change had a surprisingly big effect—dramatically improving the sustainability of their plan.
Option 3: Downsize Later in Retirement
Finally, we considered their home.
Right now, it’s worth about $1.1 million with $900,000 in equity. They love it, but they don’t expect to live there forever.
What if, around age 77, they downsize to something worth $700,000?
That simple change—freeing up equity, lowering property taxes and maintenance—had a major positive impact on their long-term outlook.
Again, nothing magical—just more realistic assumptions that match how many retirees actually live.
The Big Picture: Can You Retire in Your Early 60s?
So, back to the original question: Can someone in their early 60s with a couple million saved retire?
The answer is almost always yes, but not without understanding how you’ll spend and how your income will evolve.
The bigger questions are:
- How much can you safely spend each year?
- How will your income sources — Social Security, portfolio withdrawals, pensions — align with your expenses?
- How might your expenses change over time as your lifestyle evolves?
It’s not just about having enough money. It’s about building a plan that lets you live the life you want — with confidence and clarity.
Bringing It All Together
Michael and Lisa’s story shows that the best retirement plans aren’t about perfection — they’re about precision.
By aligning their spending assumptions with how retirement actually unfolds, they turned an unsustainable plan into a comfortable, confident one—without working longer or sacrificing their lifestyle.
And that’s the real power of thoughtful planning.
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.
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.
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 video 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, or Social Security claiming strategies. 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.