What does it really take to retire with confidence—not just a gut feeling and a half-baked financial plan?
In this blog, we’ll walk through a real-life case study featuring a couple—Jim and Sally—both age 65, wondering if their $1 million portfolio is enough to support retirement. We’ll break down their spending goals, income sources, healthcare costs, and the biggest levers they can pull to make retirement work on their terms.
If you’ve ever asked, “Is what I’ve saved enough?” this is for you.
Meet Jim and Sally
Jim and Sally are both 65 years old and ready to retire—now. They’ve worked hard, raised their family, and are eager to move into a new season of life.
Here’s their financial snapshot:
- Investments: $1,012,000 across IRAs and a joint brokerage account
- Primary Home: Valued at $1.1 million, with a $145,000 remaining mortgage
- Net Worth: Just over $2.1 million, split between investments and home equity
- Monthly Mortgage Payment: About $1,500 (principal and interest only)
They still have property taxes and health coverage to consider as they leave their employer-sponsored plans. The question is: Is it enough?
Defining Their Retirement Lifestyle
Jim and Sally don’t want to scrape by. They want to thrive.
They budgeted $6,500 per month after taxes for core living expenses: groceries, utilities, clothes, fuel, entertainment—everything it takes to live comfortably. That budget excludes:
- Mortgage payments
- Property taxes
- Healthcare costs
- Travel
Travel is a big one. They’d like to spend an additional $2,000/month for the first 10 years of retirement on meaningful trips—while they’re healthy and energized.
Accounting for Healthcare and Taxes
Even though they’re both 65 and eligible for Medicare, there are still significant costs:
- Medicare Part B and D premiums
- $3,600/year each in out-of-pocket medical expenses
On the tax side, their early retirement years could be relatively tax-efficient if they draw from brokerage accounts first, but this changes once they start tapping into retirement accounts and Social Security.
Income Sources in Retirement
Jim and Sally’s salaries disappear at retirement. But their Social Security benefits eventually kick in:
- Sally plans to claim at age 67 for $2,300/month
- Jim plans to wait until 70, raising his benefit to $3,900/month
In the interim, they’ll need to rely heavily on their portfolio for income.
The First Projection: A 13% Success Rate
Using retirement planning software, we modeled their cash flow, inflation-adjusted expenses, and projected income year by year.
The result? Not great.
- Their withdrawal rate starts at around 13–14%, well above the recommended range of 4–5%
- Even with a 6.5% average portfolio return, their assets would deplete quickly
- Probability of success: just 13%
If they retire today and maintain their spending and travel goals, there’s a high likelihood they’d run out of money.ney.
Exploring Options
Retirement planning is about trade-offs. Here’s how we helped Jim and Sally think through their options.
Option 1: Work Three More Years
If they kept working until age 68, their retirement outlook improved dramatically.
- Probability of success: jumped from 13% to nearly 70%
But the couple was burnt out. This wasn’t their ideal solution.
Option 1: Work Three More Years
If Jim and Sally continued working until age 68, their probability of success jumped from 13% to nearly 70%.
That’s a huge improvement—but they weren’t thrilled about delaying retirement.
Option 2: Cut Travel and Monthly Spending
We tested a plan that eliminated travel altogether. Technically, it helped preserve some assets—but only boosted the success rate to around 50%.
To improve that further, we reduced their monthly budget from $6,500 to $6,200. That nudged things closer to a sustainable range, but again, it required sacrificing the lifestyle they envisioned.
Option 3: Optimize Tax and Investment Strategy
Jim and Sally wondered if a smarter tax strategy or investment approach could bridge the gap.
- Tax Strategy (e.g., Roth conversions): bumped their success rate from 13% to 16%
- Aggressive investment return assumption (9%): extended income by a year or two
Useful, but not transformational. These strategies are great for optimization, but not substitutes for a solid foundation.
The Real Game-Changer: Downsizing the Home
With over $1 million in home equity, we explored the idea of downsizing.
What if they sold their home and bought a $700,000 property?
After taxes and fees, they’d free up a few hundred thousand dollars in cash. More importantly:
- No more mortgage payments
- Lower property taxes
- More investable assets for income generation
And the result? Their probability of success jumped to nearly 80%—without cutting spending, eliminating travel, or working longer.
Understanding the Net Withdrawal Picture
A critical factor in any retirement plan is the net outflow: how much income needs to come from the portfolio after accounting for Social Security or other income sources.
In Jim and Sally’s case, before Social Security kicked in, the portfolio had to cover a huge gap. This drove their withdrawal rate up to 14–15%, which is unsustainable—even with a decent return assumption.
Why Travel and Housing Are Modeled Separately
Many people mistakenly lump everything into one monthly number. That creates inflated expense assumptions—especially for things like travel that may only last 10–15 years.
We broke travel out as a distinct 10-year goal, giving us a more accurate projection.
Same goes for housing. By modeling mortgage principal and property taxes separately, we can account for the mortgage ending in their mid-70s and properly estimate longer-term needs.
What This Teaches Us About Retirement
This case study reveals an essential truth: Retirement isn’t static. It’s dynamic.
You don’t need to find a magic number. You need a plan that:
- Matches your lifestyle goals
- Accounts for inflation and healthcare
- Adjusts as you move through different phases of retirement
- Offers flexibility to pivot—whether that’s downsizing, delaying Social Security, or trimming spending
Trade-Offs Are Inevitable—But They Can Be Empowering
Jim and Sally’s experience illustrates how smart planning turns unknowns into actionable choices.
They didn’t love the idea of cutting spending or working longer. But downsizing—a move they hadn’t seriously considered—unlocked a path to immediate retirement with high confidence.
Retirement planning isn’t about restriction. It’s about making empowered decisions based on your values and resources.
Final Thoughts: You Can’t Optimize What You Don’t Measure
Planning doesn’t just tell you “yes” or “no.” It tells you how close you are—and what you can tweak to get there.
If you’re unsure whether your current plan supports your retirement vision, don’t guess. Run the numbers. Understand your options. Then decide what’s worth adjusting to get the life you want.
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.
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.
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, 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. 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.
This content may 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.
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 is for informational purposes only. Nothing discussed should be construed as personalized investment, tax, or legal advice. We encourage all viewers to consult with a qualified financial, tax, or legal professional to determine what is appropriate for their own situation.