That’s a question we hear often: “I’ve saved $1.5 million for retirement—can I afford to retire on $100,000 a year?”
Today on The Key to Yes, we’re diving into that question and walking through the strategies that can help make it a reality—whether you’re preparing to retire early, already retired, or well into your retirement years.
Hi folks, I’m Devin Choules, Founder and CEO of Choules Financial. And today, we’re going to talk about a key fear most retirees face: Will I outlive my money, or will my money outlive me?
Let’s break this down using a real-life example: Brad and Sarah, ages 62 and 60. They wanted to retire early and live on $100,000 per year. They’d done a great job saving—$1.5 million in total—but when we run the numbers, things get a little more complicated.
The 4% Rule—And Its Limits
One common rule of thumb in retirement planning is the “4% Rule,” which suggests you can safely withdraw 4% of your portfolio annually (adjusted for inflation) without running out of money. Based on their $1.5 million, that gives Brad and Sarah just $60,000 per year—well short of their $100,000 target.
So if they were relying solely on their investment savings, the answer would be no, they couldn’t retire comfortably on that amount without risk.
Turning Hope Into a Plan
This is where planning comes in.
At Choules Financial, we use what we call the Five-Fifths Framework. Investments are just one-fifth of the picture. You also need:
A retirement income plan
A tax strategy
A healthcare plan
A legacy plan
Brad and Sarah had their savings spread across an $800,000 401(k), a $300,000 IRA, and a $400,000 brokerage account. The key was coordinating how and when to draw from each account to meet their income needs—especially in the years before Sarah is eligible for Medicare and they’re both on Social Security.
Social Security Timing: Get While the Getting’s Good?
Brad was already eligible to claim Social Security at 62, but should he? Waiting until full retirement age—or even age 70—can boost benefits significantly, with an 8% increase each year you delay past full retirement age.
But as I often say: The reason they pay you more for waiting is simple—you’re closer to death. Social Security is based on life expectancy, and the math is designed to even out over time.
For Brad and Sarah, we decided that claiming early made more sense. Their view was: “Social Security only pays while you’re alive, so we’d rather get it now while we can.”
Strategic Withdrawals and Tax Planning
Then comes the question: Which account should we withdraw from first?
Their brokerage account allowed for more flexible withdrawals with fewer tax consequences compared to their 401(k) and IRA. We also discussed Roth conversions—moving some money from tax-deferred accounts into a Roth IRA to create future tax-free income and reduce their lifetime tax burden.
Beyond the 4% Rule
Brad and Sarah’s case is also a good reminder that not everyone can—or should—rely solely on market-based withdrawals. Sometimes, it makes sense to shift risk. That could mean incorporating annuities or other guaranteed income strategies to ensure a consistent paycheck, regardless of market conditions.
The real key? Don’t just aim for growth. Define your outcome. What do you want your money to do for you—and when?
The Bottom Line
If you’ve ever wondered whether you can retire early—like Brad and Sarah did—the answer lies in turning your hope into a plan. That’s what we do every day at Choules Financial. We take your goals, your savings, and your questions—and we build a clear, math-backed strategy that puts you in control of your retirement.
Thanks for tuning in to this episode of The Key to Yes. If you found this helpful, don’t forget to like and subscribe—we’ll see you next week.
