Five Questions to Ask Before Retiring — Beyond 'The Number'

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Financial adviser Dr. Guy Baker argues that most retirement planning fixates on a single savings target — "the number" — but that figure is nearly impossible to set honestly without first answering five foundational questions: what money means to you emotionally, what your earliest money memories were, what your biggest financial fears are, how much you factor in taxes, and whether you want to leave an inheritance. Until those are explored, he says, any projected retirement number will shift unpredictably with medical costs, inflation, travel plans, long-term care, and family obligations.

His framework for the number itself leans on Bengen's 4% rule — a guideline suggesting you can withdraw 4% of your portfolio each year without running out — but stresses it is only a rough starting point. For example, someone earning $150,000 at age 50 might need roughly $225,000 in annual purchasing power by age 75, but Social Security, health events, and other income sources will move that figure considerably. On taxes, Baker notes that most active funds lose roughly 1% a year to taxes and that tax-location strategies — placing assets in the account type (taxable, tax-deferred, or tax-free) where they are taxed most efficiently — can meaningfully improve net returns.