The 14 Rules of a Successful Retirement

Below are some general guidelines and rules of thumb for retirement planning.  While general guidelines can be useful, I recommend that you do the work to run retirement calculations with well thought figures that represent your unique situation. This should be revisited on an annual basis to be sure you are on track.  Guidelines and rules of thumb can be misleading and may not fit every situation.


  1. Always save between 10% and 15% of your annual income.  If you are starting late this needs to be much higher.
  2. Spend 60-80% of your pre-retirement expenses in retirement.  However, I recommend doing the detailed work to determine what your unique situation may look like.
  3. Health care is projected to increase at a rate of 7% annually. Over a long period of time inflation has averaged about 3%.  In retirement some of your expenses may not be subject to inflation such as your house payment. Other expenses, such as healthcare, will be higher. 
  4. Consider working a part time or a seasonal job to help cover large travel expenses during the first few years of retirement. You will probably spend more during your first few years of retirement and much less during your last years in retirement.  Due to compounding, money spent early in retirement has a more dramatic impact on reducing your nest egg than money spent later in life. 
  5. To determine the size of retirement nest egg required is to assume you will need $15 – $20 in savings for every dollar of shortfall between your projected income from pensions and social security and your expenses.
  6. You can withdraw 3-4% from your retirement savings without running out if you have a conservative portfolio and 4-5% if you have a moderate or more aggressive portfolio.  Most retirement guidelines assume 30 years in retirement.  I recommend running numbers that represent your specific situation to get a better understanding of what you can spend
  7. Avoid taking Social Security before your normal retirement age if you plan to work between 62 and your normal retirement age.  In 2011, Social Security will withhold $1 for every $2 earned above $14,160 between the time you are 62 and   your normal retirement age.  Additionally, working while taking Social Security may result in more income tax on your benefit.
  8. Be ready to pay a hefty bill for health insurance if you are planning to retire before 65, which is when Medicare kicks in.
  9. Don’t withdraw money from your retirement funds to meet short term, pre-retirement living expenses.
  10. Don’t sacrifice your retirement to put your children through college.
  11. Don’t automatically transfer your entire portfolio into CD’s or other extremely conservative investments upon retirement.  You may spend more than 30 years in retirement.  Some of your money should be invested in the stock market to stay ahead of inflation. 
  12. You don’t need an “income” producing investment to cover your retirement distribution needs.  You can make systematic withdrawals from your portfolio to meet your living expenses.  However, you should maintain at least 5-10 years of expenses in fixed income investments.  This will prevent the need to sell equities when the stock market is down.  A significant portion of your annual return will come from capital appreciation on the stock portion of your portfolio.
  13. Don’t keep too much in your employer’s stock or in the stock of any one company.
  14. Monitor your progress on an annual basis to stay on track.

About the author

Jane M. Young, CFP®, EA, MBA, CDFA

Jane M. Young is a Certified Financial Planner and co-owner of Pinnacle Financial Concepts, Inc. and Divorce Solutions, Inc. She has been a financial planner since 1996. She is also enrolled to practice before the Internal Revenue Service. Prior to becoming a financial planner Jane held several management positions at Digital Equipment Corporation and Quantum Corporation, where she worked for 14 years. Jane holds a Bachelor of Science degree in Business Administration from the University of Colorado and an MBA from the University of Colorado. She has also completed the two year Certified Financial Planner Professional Education Program with the College for Financial Planning.

Jane is very active in the community. She is the immediate past president of the Rotary Club of Colorado Springs and a past president of Leadership Pikes Peak. She is a graduate of the Leadership Pikes Peak class of 2004. She is a past president of the Financial Planning Association of Southern Colorado and a past president of the Pikes Peak Chapter of the National Association of Women Business Owners. Jane is also a member of the University of Colorado at Colorado Springs, College of Business, Alumni Leadership Team. Jane is a graduate of the Leadership Program of the Rockies class of 2009 and a graduate the Colorado Springs Leadership Institute class of 2011. She is also a member of the Estate Planning Council and Artemis. Jane was selected as a 2010 Woman of Influence by the Colorado Spring Business Journal.

As a fee-only financial planner Jane is a member of the National Association of Personal Financial Advisors, the Financial Planning Association, the National Association of Tax Professionals and the Alliance of Cambridge Advisors. She has been quoted in several local and national publications including The Wall Street Journal, US News and World Report, Consumer Reports, Investment News, MSN Money, Kiplinger Magazine, Financial Advisor Magazine, and the Colorado Springs Business Journal. She also works as a volunteer instructor to new advisors with the Alliance of Cambridge Advisors and has worked as an adjunct instructor at the University of Colorado at Colorado Springs.

Jane is from St. Louis, but grew up in Colorado Springs. She enjoys skiing, golfing, traveling, hiking, painting and learning to speak French.

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