Knowing When You Have Enough

"The question isn’t what age I want to retire, it's at what income."—George Foreman

Many retirement conversations start with an age: 60, 65, 70… But George Foreman nailed it—what really matters is income, not age. Put another way, retirement readiness comes down to one question: When will your income support the lifestyle you actually want?

Answering that question takes some honest reflection. Over the years, I've helped clients not only build retirement assets and income, but define what "enough" looks like for them—so they can recognize the moment they've crossed that line.

In this post, I'll walk you through the process I use to help people envision their retirement lifestyle and figure out what that lifestyle is likely to cost.

Step 1: Envision Your Ideal Retirement

Most people have a pretty clear picture of what they're retiring from—the commutes, the deadlines, the office politics. But it's just as important to get clear on what you're retiring to. Lazy Sunday brunches with family? Weekday golf rounds? Volunteering? Finally mastering that hobby you've been putting off for years?

Before you can put a number on "enough," you need to know what you're aiming for. To do this, take time to reflect on four core areas:

Family Goals

• Weekly dinners with grandkids or multigenerational vacations?

• Supporting a child's education or hosting annual family reunions?

Fun & Recreation

• Country-club memberships or quiet mornings with a book at a coffee shop?

• European cruises or camping at a nearby state park?

Fulfillment & Purpose

• Volunteering at a nonprofit, mentoring young professionals, or picking up a new creative pursuit?

• Joining community groups, launching a second-act business, or deepening a spiritual practice?

Daily Lifestyle

• Morning walks, afternoon tennis, evening book clubs?

• A low-key routine or an always-on social calendar?

The underlying questions are simple: What will my family life look like? How will I spend my time for fun? What will give me a sense of purpose? What does my everyday routine actually involve?

When you start answering those honestly, abstract goals turn into concrete lifestyle choices—and those choices are what allow you to determine how much income you'll genuinely need.

Step 2: Translate Your Vision into Dollars

Once the vision starts to take shape, the next step is breaking future spending into three tiers:

Essentials – Housing, utilities, groceries, insurance, healthcare.

Wants – Travel, dining out, memberships, hobbies, entertainment.

Wishes – International vacations, a second home, luxury splurges.

There's no "right" mix—only your mix. Maybe you're the country club and ski vacation type. Maybe coffee shop mornings and long hikes are what make you happiest. Either way, getting clear on these tiers helps you identify the minimum income you need to feel secure, the "fun money" that makes retirement enjoyable, and the aspirational extras you'd love to pursue if your portfolio allows.

Specificity matters here. Overlooked expenses—car repairs, home maintenance, medical deductibles—can quietly erode a nest egg if they're not accounted for. The more honest and detailed you are at this stage, the more useful everything that follows will be.

Step 3: Calculate Your "Magic Number"

Once you've translated essentials, wants, and wishes into annual dollar amounts, you arrive at your magic number—the portfolio size or guaranteed income stream needed to sustain your vision indefinitely.

Here's a simplified example:

Essentials: $70,000/year

Wants: $20,000/year

Wishes: $10,000/year

Magic Number: The assets required to reliably generate $100,000/year in today's dollars, after taxes.

Getting from that annual figure to an actual portfolio target is where strategy and experience come in—safe withdrawal rates, portfolio construction, Social Security timing, Roth conversions, and tax planning all play a role. But before any of those tools matter, you have to nail down the "what." The "how" follows.

Meeting Yourself Where You Are

This process looks a little different depending on where you are in the journey, but the purpose is always the same: moving from uncertainty toward clarity.

If you're ten or more years from retirement, this kind of exercise gives you a roadmap. It helps you identify priorities early and save with real purpose. Instead of watching your portfolio balance bounce around and wondering what it all means, you start to see projected retirement income taking shape—and you can begin to picture the life that income will support.

If you're nearing retirement, the work shifts into refinement. You fine-tune your lifestyle assumptions, sharpen the numbers, and zero in on the moment when your goals are met—so retirement feels like a confident decision, not a leap of faith.

If you're already retired, this process can bring a renewed sense of direction. A lot of retirees find themselves uncertain about how to allocate not just their money, but their time and energy. Revisiting what matters most right now—and where you want to invest your personal and financial resources going forward—can be surprisingly clarifying.

No matter where you are, the goal is the same: replace complexity with clarity, and uncertainty with confidence.

Step 4: Facing the Gap—When Assets Don't Match Aspirations

Sometimes the numbers reveal a gap between the income you want and the assets you've accumulated. That's not a reason to panic—it's a reason to get strategic. There are generally three paths to consider:

Delay Retirement. Working a few extra years can boost your savings, delay Social Security or pension benefits, and give you time to pay down debt or maximize tax-advantaged contributions. Even a year or two can make a meaningful difference.

Adjust Your Vision. This doesn't mean giving up what matters—it means getting intentional about tradeoffs. Maybe that month-long overseas tour becomes a two-week domestic road trip. Maybe you prioritize the activities that bring the most fulfillment per dollar spent. Small shifts in the "wants" and "wishes" categories can close a gap without sacrificing what you care about most.

Bridge with Part-Time Income. Consulting, freelance projects, or seasonal work can supplement your portfolio during the early years of retirement. Using those earnings for discretionary spending lets you preserve your core savings for essentials—and it can also provide structure and social connection during the transition.

The key is running these scenarios side by side: How much longer would I need to work? versus Which lifestyle adjustments would affect my happiness the least? That kind of comparison helps you choose the path that aligns with your values—not just the one that looks best on a spreadsheet.

Step 5: From Magic Number to Spending Mindset

Once your magic number is established, the next phase is figuring out how your assets will actually generate the income you need—and making the mental shift into a confident spending mindset. That's what we'll dig into in the next post:

• How much you can realistically spend in retirement without the fear of running out

• How to craft a withdrawal strategy that balances growth and preservation

• The psychology of spending—so every dollar you spend brings joy, not guilt

The Foundation

Knowing your magic number transforms retirement from guesswork into something you can actually plan around. You stop measuring readiness by age and start measuring it by income—the income that fuels the life you want. That clarity becomes the foundation for every decision that follows: investment strategy, withdrawal planning, Social Security timing, and more.

In the next post, Getting Into the Spending Mindset, we'll explore how to determine what you can confidently spend in retirement and how to mentally prepare for the shift from building wealth to actually using it—so you can spend with confidence rather than anxiety.

Tad Jakes, CFP®, EA, ECA