Amy Cattelino

Amy has always believed financial planning is the best tool towards reaching financial goals. She originates from a family of engineers, which has led her work for clients being technical, logical, and detailed. As a CERTIFIED FINANCIAL PLANNER™ professional, Amy is constantly scanning tax and retirement laws and facts for her clients, to ensure no [...]

Are you feeling uncertain about meeting your 2024 retirement savings target? Pure’s Financial Planner, Amy Catellino, CFP®, AIF®, shares practical steps and provides an example to guide you through a retirement review process.

  • Build a net worth statement
  • Add up liabilities
  • Add up your income
  • Figure out spending

FREE GUIDE | Financial New Year’s Resolutions Guide


Happy New Year! To make sure you’re on track for retirement you need to be periodically reviewing your numbers. Unsure where to start grab some paper, we’ll do it together.

Build a Net Worth Statement

First, you need to build a net worth statement which is great to do if you haven’t checked your balances in a while. Log into all your accounts, grab all the most recent statements you can find, start by adding up all the balances, which could be bank accounts, retirement accounts, like a 401(k), Roth IRA, investment brokerage accounts. The value of your house is also an asset along with rental homes, businesses that have value, etc. Essentially, anything that you can sell to someone, if needed, and have cash.

Add Up Liabilities

Next, you need to add up all liabilities, anything you owe money on. Credit cards auto loans student loans mortgages personally, I like sorting this by length until paid off short to long term.

Add Up Income

Next, you need to add up all your income. If you’re still working, it could be wages, business income. Looking at retirement, it could be pension income, if you have one, Social Security income, rental income. In this case, it’s good to compare what is current income versus what will be retirement income.

Figure Out Spending

Next, figuring out how much you spend is going to be key in this calculation. Sorting expenses that are fixed like mortgages, loan payment versus discretionary like food, gasoline, trips, one-off expenses. Maybe you’re going to remodel your house. What do you save for retirement? If you’re spending is going to go down in retirement, though, that would also be an important consideration to this calculation.

Now that you know your net worth, what you spend, and what’s income; it’s time to put those numbers together to figure out: are you on track for retirement?

Let’s say a couple spends today $120,000. In 10 years, assuming inflation at 3½% that spending is $167,700. This couple has Social Security benefits as their fixed retirement income, $3,000 monthly each, $72,000 a year. In retirement that benefit would grow to $87,700 a year in 10 years assuming growth of benefits at 2%. Taking $167,700 of spending compared to $87,700 of Social Security benefits creates a shortfall of $80,000.

So, if you need $80,000 from a portfolio you can use what’s called the 4% rule to test that against what do you need to have saved. The 4% rule is based on academic research that says you can tap just about 4% of your liquid assets on a year to your bases without extreme risk of premature depletion, assuming the diversified portfolio.*

You can take your shortfall divided by 4% or that shortfall times 25 it’s the same math, so in the future, the target portfolio this couple needs for retirement is $2 million. Let’s say they have a million saved today, they’re putting $24,000 a year towards retirement, and to be conservative, let’s say their portfolio earn 6% a year. Ten years from now that would be a portfolio balance of $2,100,000.

So, in this case, that’s an example of a couple that’s tracking well, and as long as markets behave and all of the assumptions stated come into play, they might be able to consider retiring a little bit earlier than 10 years.

Of course, they need to check their numbers annually to make sure that they’re still tracking well as they are currently. That’s a lot of math so if you have questions about your own retirement plan, take advantage of our free financial assessment.

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• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.

• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.

AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.

*NerdWallet, “How Long Will My Money Last in Retirement? Calculator, How to Stretch It,” January 2024.