How Much Do I Need to Retire? Rethinking the Number, the Risk, and the Cash Flow

The Couple With $8.5 Million… and One Salad

“Bruce, I’m afraid we’re going to run out of money.”

He had over $8.5 million across different accounts. They were in their early 70s. On paper, they were far ahead of where most people ever get.

But his fear was so real that when they went out to dinner, his wife shared a salad instead of ordering her own—because he was afraid they “couldn’t afford” it.

This is what we see over and over again.

People obsess over the question “how much do I need to retire?”
They chase a number.
They hit that number—or get close to it.
And still feel anxious, fragile, and uncertain.

The problem isn’t just the money.
The problem is the model.

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Why “How Much Do I Need to Retire?” Is the Wrong First Question

If you’ve ever typed how much do I need to retire or how much money do I need to retire into Google, you’re not alone. The financial industry has trained us to believe that the right “number” equals security.

But that question is incomplete.

It ignores:

• How long you’ll live
• How much you’ll actually spend
• How many emergencies will show up
• What taxes and inflation will do
• What sequence of returns your investments will experience

In this article, Bruce and I will help you:

• Understand why “how much do I need to retire” is the wrong question to start with
• See the difference between retirement cash flow vs nest egg
• Grasp sequence of return risk in retirement with simple examples
• Learn how a retirement buffer account can protect you
• Use the LIFE acronym for retirement planning (Liquid, Income, Flexible, Estate)
• Explore cash flowing assets, alternative investments, and whole life insurance in retirement
• Rethink retirement itself—from an “out of service” event to a purposeful, gradual transition

My goal is to empower you to take control of your financial life with clarity, not fear.

How Much Do I Need to Retire? Why That Question Is Misleading

The classic commercial asked, “What’s your number?” People walked around carrying a big orange figure that supposedly represented what they needed to retire.

Here’s the problem:

That number assumes:

• A set rate of return
• A set withdrawal rate
• No major disruptions
• And that you won’t touch your principal

But real life is not a straight-line projection.

When you ask how much do I need to retire, you’re usually really asking:

“How can I have enough cash flow for as long as I’m alive, without living in fear?”

The issue is not just how much you have—it’s how that wealth behaves under stress and how it converts into dependable income.

Retirement Cash Flow vs Nest Egg: What You Really Need

Traditional planning focuses on accumulation: “If I can just get to $X million, I’ll be fine.”

But what you actually live on is cash flow, not the size of your account statement.

You need to know:

• How much income do I need in retirement each month?
• Which part of that income is guaranteed and which part is variable
• How that income will behave if markets drop or inflation spikes

If you have $2 million but no idea how to turn that into reliable, sustainable cash flow, you will feel fragile. If you have a mix of guaranteed income in retirement plus flexible cash flowing assets, even a smaller nest egg can feel much more secure.

The question isn’t just how much money do I need to retire, but how do I design cash flow that will last?

Sequence of Return Risk in Retirement: Why Timing Matters More Than Averages

The industry loves to tell you that “the market averages 10% over time.” That’s nice trivia—but it’s not how your life works.

If you’re accumulating, you can ride out the ups and downs.
If you’re retired and pulling money out, the sequence of returns can make or break you.

Here’s a simple illustration:

• Start with $100,000
• Year 1: -20% → now you have $80,000
• Year 2: +20% → now you have $96,000

The average return is 0% (-20 + 20 / 2).
But your actual money is down $4,000.

Now imagine that on top of the losses, you’re pulling out 4–6% per year to live. Suddenly, the portfolio has to recover the market loss and everything you withdrew. That’s sequence of return risk explained with examples—and why relying solely on averages is dangerous.

Building a Retirement Buffer Account to Protect Your Portfolio

One of the most powerful ways to address sequence of return risk in retirement is using a retirement buffer account.

The idea is simple:

• When markets are down, you do not take distributions from your volatile assets.
• Instead, you live off a separate, safe buffer of liquid capital.

This buffer could be:

• Cash in the bank
• CDs or other stable vehicles
• Cash value in a well-designed whole life insurance policy

How a buffer account protects your retirement portfolio:

• It gives your market-based assets time to recover
• It reduces the risk of selling low during downturns
• It lowers emotional stress when headlines scream “market crash”

You’re no longer forced to sell when everything is on sale.

The LIFE Acronym for Retirement Planning: Liquid, Income, Flexible, Estate

To make this practical, we often walk clients through the LIFE acronym for retirement planning:

L – Liquid
How much “15-minute money” do you need to feel comfortable? This is money you can access quickly for emergencies or peace of mind—not dependent on your cash flow plan.

I – Income
How much income do you need each month? How much of that would you like guaranteed? This is where retirement income planning really happens.

F – Flexible
This is liquid money that’s not earmarked for emergencies or core living expenses. It’s for things like trips, special projects, and helping kids or grandkids. It’s the “I can do this without stress” bucket.

E – Estate
How much do you want to leave behind, and in what form? This is where how to make your retirement plan serve future generations becomes part of the design.

A well-designed mix of cash, whole life insurance, and other assets can touch every part of LIFE: Liquid, Income, Flexible, and Estate.

Problems With Traditional Retirement Planning and the 4 Percent Rule

Traditional planning often rests on:

• A withdrawal rule (4% or 5%)
• Market-based portfolios
• Historical averages and Monte Carlo simulations

But as Bruce mentioned:

• A 100-year average doesn’t matter if you’re retired for 20 years
• Inflation erodes real purchasing power
• Market volatility plus withdrawals increase fragility
• Focusing only on accumulation creates emotional anxiety

This is why cash flow vs accumulation in retirement planning is such an important shift. When you’re not dependent on markets going up every year just so you can eat, your whole experience of retirement changes.

Redefining Retirement: Gradual Retirement vs Traditional “Out of Service”

Nelson Nash used to remind us:

Retirement, by definition, means “taken out of service.”

Most of us don’t want to be taken out of service; we want to stay useful, engaged, and purposeful.

Instead of a hard stop at 65, consider redefining retirement as a gradual retirement vs traditional retirement:

• Negotiating part-time work or consulting
• Reducing hours instead of walking away completely
• Staying in the game mentally, physically, and relationally

We’ve seen engineers move to 10 hours a week, seasoned professionals mentor younger staff, and business owners step back from daily operations while still contributing.

Purposeful work, even part-time, can:

• Supplement your retirement income
• Reduce pressure on your portfolio
• Keep you sharp and connected

Retirement doesn’t have to mean being benched.

Cash-Flowing Assets and Alternative Investments for Retirement Cash Flow

Another powerful way to support retirement is shifting some focus from growth-only assets to cash flowing assets for retirement.

Examples include:

• Dividend-paying stocks
• Real estate (direct ownership or funds)
• Private lending
• Certain alternative investments for retirement

For accredited investors, there are a variety of alternative investments for retirement cash flow:

• Multifamily apartment funds
• Industrial and distribution center funds
• Certain energy or infrastructure programs
• Technology and telecom infrastructure (like tower or data assets)

These are not guaranteed and require careful due diligence, but they’re often backed by real underlying assets and designed with yield in mind. They can complement your more traditional holdings and create diversified income streams.

Using Whole Life Insurance in Retirement for Guarantees and Flexibility

At The Money Advantage, we talk a lot about using whole life insurance in retirement because it checks multiple boxes:

• Cash value provides a retirement buffer account
• Dividends can be used for growth, cash flow, or both
• The death benefit supports estate and multigenerational planning

Some key ways whole life can support retirement:

1. Using whole life insurance as a retirement buffer account
   • When markets drop, you can take loans or withdrawals from cash value instead of selling investments.
2. How infinite banking can support retirement and legacy
   • Policies designed with the Infinite Banking Concept can serve as your personal financing system during your working years and as a flexible liquidity source in retirement.
3. Creating guaranteed income in retirement without a pension
   • Whole life can pair with guaranteed income annuities to create a base layer of predictable cash flow.
4. Spending down other assets more confidently
   • Knowing a tax-free death benefit will refill the bucket for your spouse or heirs allows you to enjoy your money more while you’re alive.

You’re no longer trapped by the fear of “What if I spend too much and leave nothing?”

How Much Do I Need to Retire? Rethinking the Real Question

So where does this leave the original question: how much do I need to retire?

Here’s how we encourage you to reframe it:

• How much monthly income do I really need to live the life I want?
• How much of that income can I structure as guaranteed vs variable?
• How can I design a mix of assets—cash, whole life, investments, and possibly alternative cash-flowing assets—to support that?
• How do I build in buffers, flexibility, and a legacy for the next generation?

When you think this way, you’re no longer chasing a magic number. You’re designing a system that supports your life, your purpose, and your family—even in uncertain times.

Listen to the Full Episode on How Much Do I Need to Retire

If this article stirred questions or “aha” moments, the podcast episode goes even deeper.

In the full conversation, Bruce unpacks:

• Real client stories that bring these concepts to life
• Detailed examples of sequence of return risk in retirement
• How we build and use retirement buffer accounts in practice
• The full breakdown of the LIFE acronym for retirement planning
• Specific ways we’ve seen whole life insurance, Infinite Banking, and alternative investments used to create cash flow and multigenerational impact

You’ll hear the nuance, the tone, and the stories that a blog can only summarize.

👉 To dive deeper into how much do I need to retire and how to design a retirement that truly fits your life and legacy, listen to the full podcast episode here:

Podcast: Play in new window | Download (Duration: 42:55 — 49.1MB)

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Book A Strategy Call

If this stirred something in you, don’t default to the path of least resistance. The default path is expensive. It sends more of your life’s work to taxes than you ever intended.

If you want help applying these ideas to your situation, book a call with our team. We’ll help you see your options clearly and build a plan that keeps more in your control for your family and the generations after you.

We offer two powerful ways to help you create lasting impact:

Legacy Strategy Call – If you want to uncover your family values, mission, and vision, and create a legacy that’s about more than just money, we can guide you through the process of financial stewardship and family leadership. Save time coordinating your family’s finances while building a legacy that lasts for generations. Book a Legacy Strategy Call to learn more about how we can help.
If this stirred something in you, don’t default to the path of least resistance. The default path is expensive. It sends more of your life’s work to taxes than you ever intended.

Financial Strategy Call – Discover how Privatized Banking, alternative investments, tax-mitigation, and cash flow strategies can accelerate your time and money freedom while improving your life today. Let us show you how to align your financial resources for maximum growth and efficiency. Book a Strategy Call with our team today.

FAQ: How Much Do I Need to Retire?