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Michael says, “While taking the first step is commendable...without direction it is still called ‘wandering’.”

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Retirement Read Time: 3 min

How much monthly income do you need to retire?

When you think of planning for retirement, like most individuals, you probably visualize a number. The reality is that most individuals think in terms of an account balance at retirement. Business owners think in terms of selling the business, a lump-sum value. However, during our working lives, we tend to budget for monthly expenses. Business owners think in terms of monthly income. Retirement should be no different.

Business owners, in particular, have a difficult time thinking about retirement in terms of monthly income because most business owners feel that the reason they work long and hard to make their business successful is to ensure their retirement and create wealth. The business is the account balance at retirement. But that only works if there is a way to monetize the business wealth and transform it into personal wealth.

In today’s world, the 401(k) plan is the predominant employer-sponsored retirement plan. The reality is participants should be thinking in terms of monthly income. Throughout our working lives, we are in a mindset of a financial world based on monthly expenses (i.e., phone bills, rent, mortgage, car payments, business loans, etc.). The monthly budget also covers the activities we enjoy to maintain our standard of living (e.g., restaurants, movies, golf, vacations, etc.). An account balance or lump sum is meaningless unless it can be equated to covering monthly expenses during retirement.

Can your current retirement plan balances provide you with enough income to cover your monthly expenses during retirement? What guarantees does your current retirement plan offer to help ensure that you won’t run out of money during retirement? The typical 65-year-old has a median life expectancy of almost 20 years. That means that half of them will live longer than that. For the typical 65-year-old couple, there is a 50% chance that one will live to 92, and a 25% chance that one will live to 96. Older individuals may think of their own mortality but don’t peg a year to it.1

There have been numerous studies done on how much one should have for retirement — 70%, 85%, 90% of final compensation, to live comfortably. There have also been studies that show how much of your account balance you should withdraw — 2%, 4%, 6%, based on various models, to provide a retirement income without outliving the balance.

How much do you need? How do you know? Are you worried yet?

Whether you’re a participant in an employer-sponsored retirement plan, a business owner, or both, it is important to evaluate your unique situation with a financial professional as well as with those in your personal and professional life.


1 American Academy of Actuaries and Society of Actuaries, Actuaries Longevity Illustrator,, (accessed Aug. 1, 2022).


This material is intended for general public use to potentially assist you in planning for your future. By providing this material, Guardian/Park Avenue Securities is not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity.

Brought to you by The Guardian Network © 2022.  The Guardian Life Insurance Company of America®, New York, NY 

2022-145504 Exp. 10/24 *pre-approved content*


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