Financial planning is easy in your early years. If you’re wise and received good advice, you started saving 12%-15% of your income from your first day of full-time work. That works for the first few decades.

When you hit middle age, you will want to see if you’re on track to retire comfortably. That’s when you start to realize there are a lot of assumptions built into a long-term financial plan. Thankfully big companies like JP Morgan and Fidelity put together savings checkpoints that give you a clue about whether you’re on track.

As an example, Fidelity says have 3x your salary saved by age 40. JP Morgan breaks it down to a more specific multiple based on your salary. Those are super helpful for busy professionals who want a basic idea.

By the time you hit your 50s, you ought to take a closer look at when you can retire and what you can spend. Cherry Tree has a one-page financial plan that we use with our clients. But what if you’re looking for something simpler? Try this:

Step 1: Add up all your assets excluding your primary residence.

Step 2: Multiply your assets by 4% (we can argue about whether the number should be 3% or 5%, but 4% works for a rough plan).

Step 3: Multiply your monthly Social Security and pension payments by 12.

Step 4: Add the numbers from Step 2 and Step 3.


Step 1: Assets = $1,500,000
Step 2: $1,500,000 x 4% = $60,000
Step 3: Monthly Social Security = $3,000; $3,000 x 12 = $36,000
Step 4: $60,000 + $36,000 = $96,000 annual spending if you retire today

That’s what you’ve saved up for today. If you want to know how much you can spend on the date you retire, you need to use a more detailed calculator. Reach out to me if you want help, or check out your 401k provider. I’m sure they have one where you can add in outside assets.

About the Author:

John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2022. He is a CFA charterholder and CERTIFIED FINANCIAL PLANNER™ Professional.

Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.