The Million-Dollar Retirement Question Is All Wrong
Focusing on how much you need to save and how far it'll go doesn’t exactly ensure you will have enough income to last you for life.


Baby Boomers are the 401(k) generation.
When Boomers started working, nearly every major company offered some form of pension providing lifetime income. Now, as members of this generation are retiring in large numbers, pensions are nearly extinct outside of government employers.
The 401(k) was invented 40 years ago and now shares the retirement landscape with Social Security. Many Boomers have a good amount of money in their 401(k) accounts, but that doesn’t mean they can stop planning. In fact, this is when critical retirement planning begins.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Can you answer the question?
Most of us hire financial advisers or go to retirement calculators to figure out what to do. I see a real problem in the typical question (or variation) that advisers and calculators ask: “How far does $1 million go in retirement?”
Here’s my complaint: It’s the wrong question, and answers provided by advisers or calculators are nonsensical at best or dangerous at worst.
Sure, you can plan to spend a certain amount on hobbies. Another amount will go to spoiling the grandchildren. And a chunk of your savings will pay for fixed expenses like heating your residence and buying food, as well as out-of-pocket medical costs and medical insurance premiums. If you are disciplined and build in some room for inflation, that budget will work for you.
But there’s a problem with making plans based on how much you’ve saved: These calculations are based on several “average” figures. What if you are part of the 50% who live beyond their average life expectancy? Or the estimated:
- 25% who don’t get average market performance because they don’t stay the course when markets get bumpy?
- 20% or so who live well beyond their life expectancy and incur $100,000 or more in unreimbursed medical and caregiver costs?
- 10% who live through a period of adverse market performance?
Planning for the average puts lots of retirees at risk.
Speaking of another risk of the savings-focused strategy, you may have complete faith in your financial adviser, but if that person has been working with you for several years, there is little chance that he or she will still be working for you when you turn, say, 88 or 95.
Running on empty
For those people, asking “How far does $1 million go in retirement?” is the same as getting into your car for a trip from Boston to Washington, D.C. Rather than checking the mileage or traffic, you tell your passengers that we’ll go as far as the gas in the tank will take us. You also know that, depending on conditions, you might run dry in Baltimore.
Nothing against Baltimore, but I want to visit the sites in D.C. And if I live to age 95 instead of my life expectancy of 88? Planning for so-called "average growth" in my investments will leave me short in savings by seven years – not counting the extra costs that often arise late in retirement.
The right question
I advocate planning for income, not for savings. Then the question is reasonable: “Do I have enough income to retire?”
Income that is for life. Income that does not depend so directly on market performance. And income that covers your budgeted expenses.
For most of us, the only guaranteed lifetime income, in addition to Social Security, will come from any remaining pensions and income annuities that we purchase with our savings. If you accumulate $1 million for use in retirement, that’s wonderful.
To determine how to create an income allocation plan that will increase your amount of after-tax income (spendable) and reduce income volatility (dependable), put in place these three steps:
- Include income annuities as a new asset class.
- Treat your rollover IRA accounts differently than your personal (after tax) savings.
- Manage withdrawals from your rollover IRA savings rather than simply taking the IRS-mandated required minimum distributions.
In addition, here’s a case study of how one retiree used our proprietary income-planning tool to increase pre-tax income over the course of his lifetime by 32% while decreasing income volatility by 43%. That retiree will be able to spend that extra income or reinvest to generate a greater legacy for his kids and grandkids. More income with less risk is a winning strategy.
My company, Go2Income offers a calculator that will help you determine how much income your savings can generate, as well as what form of income annuity, and from which companies, would offer the best deal.
Many retirees will be OK spending down their retirement accounts. But it’s impossible to tell whether you will be one of them. The only way you can predict with certainty what kind of lifestyle you will be able to enjoy in retirement is to take responsibility for your 401(k) and make decisions around income.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Jerry Golden is the founder and CEO of Golden Retirement Advisors Inc. He specializes in helping consumers create retirement plans that provide income that cannot be outlived. Find out more at Go2income.com, where consumers can explore all types of income annuity options, anonymously and at no cost.
-
8 Rules for Choosing the Right Financial Adviser
Not all advisers are created equal. Here's how to find one qualified to manage your wealth and protect your legacy. From verifying credentials to trusting your gut, follow these rules to find a financial adviser.
-
A Hated TSA Rule Was Finally Phased Out
After nearly 20 years, the TSA is ending its shoes-off policy. Travelers will still need a Real ID, and advanced screening remains in place. Here’s what to expect on your next flight.
-
Financial Fact vs Fiction: Why Your 'Magic Number' Isn't Actually Magical
Do you think you're diversified if you're invested in the S&P 500 and Nasdaq? Do you think your tax rate will fall in retirement? Think again — and read on for other myths that could be leading you astray.
-
Opportunity Zones: An Expert Guide to the Changes in the One Big Beautiful Bill
The law makes opportunity zones permanent, creates enhanced tax benefits for rural investments and opens up new strategies for investors to combine community development with significant tax advantages.
-
Five Ways Retirees Can Keep Perspective Through Market Jitters
Market volatility is a recurring event with historical precedents (the dot-com bubble, global financial crisis and pandemic), each followed by recovery. Here's how people who are near or in retirement can navigate economic uncertainty.
-
I'm a Financial Strategist: This Is the Investment Trap That Keeps Smart Investors on the Sidelines
Forget FOMO. FOGI — Fear of Getting In — is the feeling you need to learn how to manage so you don't miss out on future investment gains.
-
How Advisers Can Steer Their Clients Through Market Volatility (and Strengthen Their Relationships)
Financial advisers need to be strategic when they communicate with clients during market volatility. The goal is to not only reassure them but to also help them avoid rash decisions, deepen your relationship with them and build lasting trust.
-
The Hidden Costs of Caregiving: Crisis Goes Well Beyond Financial Issues
Many caregivers are drained emotionally as well as financially, leading to depression, burnout and depleted retirement prospects. What's to be done?
-
Cash Balance Plans: An Expert Guide to the High Earner's Secret Weapon for Retirement
Cash balance plans offer business owners and high-income professionals a powerful way to significantly boost retirement savings and reduce taxes.
-
Five Things You Can Learn From Jimmy Buffett's Estate Dispute
The dispute over Jimmy Buffett's estate highlights crucial lessons for the rest of us on trust creation, including the importance of co-trustee selection, proactive communication and options for conflict resolution.