Joseph Sachetta
Every week I see new headlines about retirement. A magic number to hit. A single “safe” withdrawal rate. If you’re within ten years of retiring, simple rules make for good stories, but they don’t make a plan. Your taxes, healthcare, family, and goals matter more than any headline. In this article, I’ll unpack five popular rules, explain what each really says, where it can help, where it misses, and how a personalized plan turns guidance into decisions you can trust.
Rule 1: “Hit the magic number”
Articles often name a single savings target for everyone. That can be motivating, and it is a fine way to start thinking about readiness. The problem is that a single number cannot know your state taxes, housing plans, healthcare needs, family support, or legacy wishes. Two people with the same balance can live very different retirements.
How a personalized retirement plan helps
We start with your life. We map the spending that feels right, layer in Social Security and pensions, and account for taxes. Then we size a range, not a rigid target, so you have room to make good choices without second-guessing. We keep it judgment-free and adjust together as life changes.
Rule 2: “Save 10× salary by 67,” or “save 15% of pay”
These guidelines assume steady saving, a typical investment mix, and a traditional retirement age. They can be useful if you are building the habit. Real lives are rarely that linear. Equity compensation, business ownership, caregiving breaks, and late starts all change the math. The right savings rate also depends on how you invest and when you plan to retire.
How a personalized retirement plan helps
We set a savings lane that fits your reality now. We make smart use of catch-ups, Roth or pre-tax choices, and HSAs when they fit. If income varies, we design an automatic system that captures the good years and protects the tight ones. The goal is steady progress with less stress.
Rule 3: “Replace 70 to 80 percent of your income”
This rule of thumb reminds us that retirement spending is often lower than peak earnings. It can be a useful nudge. It is also very general. It overlooks taxes, mortgage status, dependents, charitable goals, and how you want to spend your time. Spending is not a flat line. Many households spend more in the early years, level off in the middle years, and see healthcare rise later.
How a personalized retirement plan helps
We build a spending map that changes over time, with clear categories for essentials and for the fun stuff. We show how taxes affect each dollar of income. Then we line up Social Security, pensions, and portfolio withdrawals to support the life you want, not a generic percentage.
Rule 4: “Medicare will cover it”
It is true that Medicare is valuable coverage, and planning for enrollment matters. It is also true that premiums and deductibles are real, and most long-term custodial care is not covered. Health and care costs can be the biggest surprise for many families.
How a personalized retirement plan helps
We price healthcare into your plan and talk through options with care and clarity. That includes Medigap versus Advantage decisions, IRMAA awareness, self-funding reserves, traditional long-term care insurance, hybrid life policies with LTC benefits, home-equity strategies, and, when appropriate, elder-law planning. We start early so you have choices.
Rule 5: “Withdraw 4 percent”
This guideline says you can take about 4 percent of your portfolio in the first year of retirement, then raise that dollar amount each year for inflation. It offers a simple starting point. Real life does not stay flat. Markets move, expenses shift, and inflation can surprise you. A fixed rate can push spending too high after poor market years, or hold you back when conditions are strong.
How a personalized retirement plan helps
I prefer a living withdrawal target inside a working plan. Each year we review the plan with fresh numbers and update your withdrawal to fit the current picture. Essentials stay protected, and discretionary spending flexes as life evolves. We fine-tune travel or gifting in strong or soft markets, choose the right accounts for each withdrawal to manage taxes and Medicare brackets, and use portfolio rebalancing as a natural source of cash. If your priorities change, we adjust the plan so it continues to reflect your version of an ideal retirement.
Why taxes sit at the center
As they say, “It’s not what you make, it’s how much you keep.” Rules of thumb rarely account for taxes, yet your lifetime results often hinge on them. A personalized plan coordinates withdrawal order, Social Security timing, and Roth conversions to reduce taxes over time, manage Medicare income brackets, and keep more of your plan intact.
How we keep your plan current and useful
A plan only works if it stays alive. At Sachetta, our advisors talk with clients regularly, not once a year. We check in when markets move, when tax laws change, when income or spending shifts, and before and after big life events. The goal is steady guidance and fewer surprises, so you can live your life and know the plan is working in the background.
Rules of thumb are fine for headlines. Your retirement is personal. I would rather build a plan we update together, with clear numbers and calm next steps.
If this topic is relevant to you, learn more about our approach to wealth management, or contact us to talk about becoming a client so we can help you with a personalized financial plan.
Joseph Sachetta, CFP®, CPA/PFS, MBA, MST, For over 40 years, Joe has worked in finance and accounting. He is a Certified Financial Planner, and a Certified Public Accountant. Joe’s passion lies with helping his clients strike a balance between living for today and saving for tomorrow.