Can We Afford To Retire Within The Next Five Years?

A Retirement Planning Case Study

Names, ages, and financial details have been changed for privacy purposes. This case study is based on real-world retirement planning conversations.

The Situation

Mark and Susan, a married couple in their late 50s, contacted Coastal Wealth Management with a question we hear frequently:

"Can we afford to retire within the next five years?"

Like many families approaching retirement, they had done a good job saving throughout their careers but weren't sure whether their finances could support the lifestyle they envisioned.

They had accumulated retirement savings, expected future Social Security benefits, and owned their home. While they felt they were in decent shape financially, they lacked confidence in their retirement timeline.

Their primary concerns included:

• Will our money last throughout retirement?
• How much can we safely spend each year?
• When should we claim Social Security?
• What happens if the market declines shortly after we retire?
• How will healthcare costs impact our retirement plan?
• Are we paying more taxes than necessary?

Most importantly, they wanted clarity on whether retirement within five years was realistic.

Starting With The Numbers

The first step was understanding their current financial picture.

We gathered information regarding:

• Retirement accounts
• Taxable investment accounts
• Pension benefits
• Social Security estimates
• Current spending
• Future retirement spending goals
• Insurance coverage
• Outstanding debt
• Estate planning documents

Many people focus solely on how much they have saved.

In reality, retirement planning is less about a specific account balance and more about whether your assets can support your desired lifestyle.

A person with $1 million saved may be perfectly prepared for retirement, while another with $2 million may not be, depending on spending needs and goals.

Understanding Retirement Expenses

One of the biggest mistakes future retirees make is underestimating retirement spending.

Mark and Susan initially believed they would spend significantly less after retiring.

After reviewing their budget, we discovered that while some expenses would decrease, others would likely increase.

Potential retirement expenses included:

• Travel
• Healthcare costs
• Home maintenance
• Vehicle replacement
• Gifts to children and grandchildren
• Inflation

We worked together to estimate a realistic retirement budget rather than relying on assumptions.

This became the foundation of their retirement income plan.

Creating A Retirement Income Strategy

Retirement is often described as transitioning from accumulation to distribution.

The challenge becomes creating reliable income from multiple sources.

For Mark and Susan, future income could come from:

• Social Security benefits
• Retirement account withdrawals
• Taxable investment accounts
• Cash reserves
• Potential part-time employment

We modeled different retirement scenarios to determine how these income sources could work together.

The goal wasn't simply generating income.

The goal was generating sustainable income that could last for decades.

Optimizing Social Security Benefits

Social Security decisions can have a significant impact on retirement success.

Like many couples, Mark and Susan initially planned to claim benefits as soon as they became eligible.

After running various scenarios, we found that delaying benefits could potentially increase lifetime retirement income.

Factors we evaluated included:

• Life expectancy
• Health history
• Spousal benefits
• Survivor benefits
• Investment assets available during the delay period

For many retirees, Social Security represents one of the largest guaranteed income sources available.

Making the right claiming decision can potentially add tens or even hundreds of thousands of dollars in lifetime benefits.

Stress Testing The Retirement Plan

A retirement plan should work during both good markets and difficult markets.

We stress-tested their plan against multiple risks, including:

Market Downturns

What happens if the stock market experiences a significant decline shortly after retirement?

Inflation

How does the plan hold up if living costs rise faster than expected?

Healthcare Expenses

What if long-term healthcare costs become necessary later in retirement?

Longevity Risk

What if one or both spouses live well into their 90s?

Running these scenarios helped identify potential weaknesses before they became real-world problems.

Looking For Tax Planning Opportunities

Taxes often become one of the largest expenses retirees face.

Many people enter retirement with substantial balances in tax-deferred accounts but no strategy for managing future tax liabilities.

We reviewed opportunities including:

• Roth conversions
• Strategic IRA withdrawals
• Capital gains planning
• Tax-efficient withdrawal sequencing
• Required Minimum Distribution (RMD) planning

A proactive tax strategy can potentially increase after-tax retirement income without requiring additional investment returns.

The Outcome

After building a comprehensive retirement income projection, reviewing Social Security options, evaluating taxes, and stress testing multiple scenarios, Mark and Susan gained something many future retirees lack:

Confidence.

Their analysis showed that retiring within five years appeared achievable if they remained disciplined with spending and continued following their savings strategy.

More importantly, they understood the tradeoffs involved.

Rather than wondering if retirement might work, they had a plan built around realistic assumptions and measurable goals.

Could You Afford To Retire Within The Next Five Years?

Many people focus on a retirement age rather than retirement readiness.

The better question is:

"Can my assets, income sources, and financial plan support the lifestyle I want?"

If you're within five years of retirement, now may be the ideal time to evaluate:

• Retirement income projections
• Social Security claiming strategies
• Investment allocation
• Tax planning opportunities
• Healthcare costs
• Estate planning considerations

The earlier these decisions are addressed, the more options you may have available.

Schedule A Retirement Readiness Consultation

If you're wondering whether retirement within the next five years is realistic, Coastal Wealth Management can help you evaluate your options and build a personalized retirement strategy.

We work with individuals and families throughout Massachusetts and New England to create retirement income plans designed to provide confidence, clarity, and long-term financial security.

Ready to see if you're on track for retirement? Contact Coastal Wealth Management today to schedule a retirement planning consultation.