What's Your Number — And Do You Actually Know Where It Came From?

When someone tells me they think they need about a million dollars to retire, my honest reaction is somewhere between wanting to give them a hug and wanting to gently shake them.

Not because a million dollars is the wrong number. It might be exactly right. But when I hear a number that round, said with that much confidence, I'm almost certain it didn't come from a plan. It came from somewhere else — a magazine, a conversation, a vague sense of what sounds like enough.

And the thing is, I get it. Retirement planning is genuinely complicated, and most people haven't been handed the tools to think through it clearly. That's not a character flaw. It's just a gap.

So this post is an attempt to close it a little. Not with a formula that spits out your number — nobody's situation is that simple. But with the actual questions that determine what your number should be, and why most round numbers don't answer any of them.

The number isn't the plan. The plan is the plan. The number is just what falls out of it when you do the work honestly.

The withdrawal rate question most people skip

The most common framework for figuring out how much you need is working backwards from how much you plan to spend. If you need $80,000 a year to live the retirement you want, and you're planning to draw from your portfolio to cover that, how large does the portfolio need to be?

The answer depends on your withdrawal rate — the percentage of your portfolio you're pulling out each year. The most commonly cited range is somewhere between 4 and 5 percent, and that's a reasonable starting point. But it's just a starting point.

Someone who retires at 55 in excellent health, potentially facing 40 years of distribution, needs to be much more conservative with that rate than someone retiring at 70 with health challenges who realistically may have a shorter runway. For the former, something closer to 3.5 or 4 percent might be right. For the latter, 6 percent might actually be appropriate.

That difference sounds small. Over a 30-year retirement, the difference in portfolio size it implies is enormous. And most round numbers don't account for any of it.

Social Security is part of your plan, not an afterthought

One of the most consistent gaps I see is that people think about their portfolio in isolation from everything else coming in.

Social Security is real income. A pension, if you have one, is real income. Part-time work in early retirement, rental income, an inheritance that's reasonably likely — all of it factors in. And every dollar of reliable income coming from somewhere other than your portfolio is a dollar your portfolio doesn't have to produce.

The math on Social Security timing alone can shift your required portfolio balance by hundreds of thousands of dollars. Claiming at 62 versus 70 isn't just a personal preference — it's a financial decision with a very large number attached to it, and it interacts directly with how much your investments need to do.

If you've built your number without clearly mapping your other income sources and integrating them into the plan, the number is incomplete. It's probably too high or built around assumptions that don't reflect your actual situation.

Retirement isn't a flat line of spending

Another assumption that quietly distorts most retirement plans is that spending stays roughly constant throughout retirement. In practice, almost nobody experiences it that way.

The early years of retirement — when you're healthy, mobile, and finally have the time — tend to be the years people want to spend more. Travel, experiences, helping adult kids, being generous. That spending naturally tapers as people age, and then often spikes again late in life around healthcare.

When we model retirement spending, we typically think in decade-long intervals. Early retirement is often the most expensive phase. Mid-retirement tends to settle. Late retirement is harder to predict, but healthcare costs are real and they almost never go down.

A plan that assumes flat annual spending will either leave you feeling unnecessarily constrained in your early years when you could be living more fully, or it will underestimate what you actually need if you spend heavily early and haven't modeled the back end honestly.

Most people would have preferred, with the benefit of hindsight, to have spent more in the early years of retirement. The window for that is shorter than it feels when you're standing at the beginning of it.

The tax question nobody asks

Here's the one that gets me every time.

You tell me your number is a million dollars. Okay — is that million in a traditional IRA? A Roth? A brokerage account? A combination?

Because those are three completely different situations. A million dollars in a traditional IRA is pre-tax money. Every dollar you pull out gets taxed as ordinary income. A million dollars in a Roth is tax-free money. A million in a taxable brokerage sits somewhere in between, depending on how long you've held things and what the gains look like.

I'm not even talking about sophisticated tax strategies — Roth conversions, asset location, tax-loss harvesting, any of that. I'm talking about the most basic first-grade-level assumption: where does this money actually live, and what does the government get when you take it out?

That question alone can change your effective number by hundreds of thousands of dollars. And in my experience, it's almost never factored in when someone tells me their number with confidence.

The thing that matters most

All of the above — withdrawal rates, income sources, spending stages, tax treatment — those are inputs. They matter a lot. But there's something underneath all of them that matters more.

In almost every situation I encounter, the assets someone owns are dictating their plan. Or more accurately: the assets and the plan aren't really connected at all. Someone ended up with a certain portfolio — through a workplace plan, an inheritance, a series of individual decisions over the years — and the retirement plan is kind of built around justifying what's already there.

It should work the other way. Your plan should come first. What do you actually need this money to do? Over what timeline? Against what risks? With what flexibility? The answers to those questions should determine what you own — not the other way around.

That sounds simple. It's surprisingly rare. It's also exactly why the Keystone Method exists.

The assets you own should be dictated by your plan. In my experience it's almost always the other way around — or the two aren't connected at all. That's the gap worth closing.

So what is your number?

Honestly, I can't tell you. Nobody can without knowing a lot more about your specific situation — your timeline, your health, your income sources, your tax picture, how you actually want to spend your retirement years, and how much volatility you can genuinely stomach when the market gets loud.

What I can tell you is that the number you have in your head right now — whatever it is — probably deserves more scrutiny than it's gotten. Not because it's wrong. Maybe it's close. But "close" on a number this important, over a retirement this long, with this many variables, has a way of becoming quite far by the time you notice.

The good news is that working through it clearly isn't as hard as it sounds. It just requires asking the right questions in the right order — and being honest about the answers.

Run your own numbers

The calculator below lets you work through the core math — starting balance, contributions, rate of return, time horizon, and withdrawal rate — so you can see how your specific inputs affect the picture. It won't account for every variable (nothing will), but it's a useful starting point for stress-testing the number you've been carrying around in your head.

If you want to go deeper — including the income, tax, and spending-stage questions this post raises — we put together a free guide that walks through the full framework. It takes about 15 minutes and includes a worksheet you can work through on your own.

This post is meant to be educational — it's not personalized financial advice. Retirement planning involves a lot of moving parts, and the right answers depend entirely on your specific situation. If working through these questions raises more questions than it answers, that's actually a good sign — and a good reason to sit down with someone who can look at the full picture with you.