Calculating Retirement: The Importance of a Detailed Plan

By Stephen V. Kenney, CFA, CFP
Gray Private Wealth, LLC

“Will I have enough?”  It’s an important question to ask when thinking about retirement.  Coming up with a realistic assessment of whether your savings will be sufficient to cover your spending needs during retirement is a complex exercise.  First, it requires you to look into the future and estimate post-retirement expenses.  Then it requires a prediction of the rate of growth of your retirement savings during your retirement years. 

Many people expect that their annual spending will decrease during retirement. But is that realistic?  Increased leisure time during retirement will bring many new opportunities which may end up adding to your spending in ways that you haven’t anticipated.  Travel expenses, for example, may increase with more time to vacation or visit family.  In another category, medical care costs have the potential to become a larger part of the retirement picture than expected.  Even with Medicare or other government-provided healthcare, out of pocket healthcare costs continue to grow for most people.  If you plan to retire before being eligible for Medicare and will shop for a private insurance program after employer coverage ends, you may find annual premium costs shocking.  Even with a good handle on expenses, it will be important to factor in today’s higher rate of consumer price inflation.  At a 2% rate of inflation, the price paid for goods or services today will rise nearly 50% in 20 years.

As you look into the future to estimate your spending, you must also ask how long that future will be.  Does your retirement plan reflect a realistic estimate of your longevity?  The Social Security Administration’s current life expectancy tables estimate that a 65-year-old male can expect to live past age 84, and a woman of that age can expect to live beyond 86.  Looking further, a 65-year-old male has a 22% chance of living past age 90.  For couples, there is a 47% chance that one partner will reach 90, and a 20% chance one partner will live to age 95. 

On the savings side, it is important to have a strategy for withdrawing from retirement savings accounts. This goes beyond the mandated minimum distributions. Income tax consequences and estate planning objectives may mean certain accounts should be depleted before others.

These are just some of the variables that need to be considered in a comprehensive retirement plan.  An experienced financial planner can work with you to put “numbers to paper” and create multiple scenarios of different spending levels or investment return assumptions to test the plan.  We believe it is important to be conservative when projecting expenses and investment return assumptions.  We also believe strongly in looking at “stressed” scenarios to consider the effect on the plan resulting from unexpected expenses or lower than average future returns in the investment markets. 

Putting together a comprehensive, yet flexible plan is a critical step in preparing for retirement.  It requires a lot of effort up front but can provide peace of mind as you enter the next phase of your life. 

Stephen Kenney, CFA, CFP is Chief Compliance Officer & Director of Client Development at Gray Private Wealth, LLC, a wealth management advisory firm located in Canton, MA. He can be reached at (781) 232-2020 or

Gray Private Wealth, LLC (“GPW”) is an SEC-registered investment adviser.  This material is for informational purposes only, as of the date indicated, is not complete, and is subject to change. Additional information is available upon request. Any opinions expressed herein represent current opinions as of the date of publication only and may change based on market or other conditions. 

This material may contain assumptions that are “forward-looking statements,” which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual results will not be materially different from those described here.   Certain information herein has been provided by and/or is based on third-party sources and, although believed to be reliable, has not been independently verified, and GPW is not responsible for third-party errors.  No representation is made with respect to the accuracy, completeness or timeliness of information or opinions herein and GPW assumes no obligation to update or revise such information or opinions.

Information presented is for educational purposes only and should not be considered investment advice or an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  All investments involve risk, including risk of loss and are not guaranteed.  Past performance is no guarantee of future results.  There can be no guarantee that GPW will achieve any specific investment objective or level of performance.  GPW does not offer legal or tax advice.  Please consult your investment or tax professional for additional information concerning your specific situation.  Specific companies, industries or securities described are meant to be illustrative of investment style only. Additional information regarding GPW including fees, expenses, and risks of investment, is contained in GPW’s investment advisory agreement, its Form ADV, Form CRS and related disclosure documents and should be reviewed carefully. GPW’s ADV 2A and Form CRS can be accessed via .

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