Math, Myths & The Reality of Retirement | It's Not the Pile, It's the Paycheck

What's Your Number?

If you watched TV in the 2000s, you remember the commercials: people walking around with a giant orange number floating over their heads.What's your number? What do you need to retire?

A new study puts a figure on it:the average retired couple needs about $1.16 million to retire comfortably.

That's a scary headline — because the majority of Americans approaching retirement don't have a million dollars saved. So is the number a reality, or a myth?

In this episode of Money On Tap, Ben Brayshaw and Dan Michelon take the number apart piece by piece — and make the case that the entire way we've been taught to think about retirement is pointed at the wrong target.

Forget the number. It's all about income.

The Myth of the Magic Number

We're programmed from childhood to think in savings goals. Want the $20 toy? Save $20 — and when you get there, you won.

Retirement doesn't work that way.

When you get to $1.16 million, there's no parade. You don't just get to retire, mission accomplished.You still have to be a steward of that money — accounting for taxes, income, market swings, and health events — and make it last 15, 20, 25, 30 years or more.

And here's the question that exposes the myth: what happens if you hit your number, and then the market drops 30% through no fault of your own? Is your retirement suddenly off?

The number was never the finish line. It's a starting point — and how youuseit matters more than what it is.

The Math Behind the Number

Where does $1.16 million actually come from? The study works backwards from income:

• Average annual spending for a retired couple:about $84,000 (gross, before taxes)
• Average Social Security income:about $37,700 per year
• The gap:$46,300 per year must come from your portfolio
• At a 4% withdrawal rate, producing $46,300 requires roughly $1.16 million

Notice what the study did:it converted the number to income immediately.Even the headline stat quietly agrees — it's not about the pile, it's about what the pile produces.

Location moves the target, too. Lower-cost states like North Dakota, Arkansas, Mississippi, West Virginia, and Iowa come in around $800,000, while New Jersey, Hawaii, California, D.C., Massachusetts, and Connecticut push past $1.2–1.3 million. New Hampshire lands mid-range, right around $1.12 million — just a tick below the national average.

What the Number Doesn't Tell You

A static target can't see your life. It doesn't factor in:

• Sequence of returns risk.A bad first five years of retirement can put a portfolio on a negative trajectory it never recovers from. (If you've never watched the sequence of returns video under the Resources tab at brayshawfinancial.com, make the time.)
• Market shocks.1987 saw a 33% drop. 2022 was down 18% and people were rattled. Expecting no violent pullback over the next 10–20 years isn't planning — it's hoping.
• Health events.Nursing care and unforeseen health issues can draw down a portfolio faster than any bear market.
• Inflation and the unknowns.The study assumes today's conditions — today's tax code, today's inflation, today's Social Security. Flexibility has to bebuilt intoa portfolio intentionally.

The Tax Reality Nobody Budgets For

The $84,000 spending figure is gross — and taxes are where good plans quietly leak thousands every year:

• At $84,000 for a couple filing jointly, you're still in the12% bracket— but roughly 85% of your Social Security is likely being added back for taxation.
• Cross into the low six figures and you're in the22% bracket— a different story entirely.
• At 73,required minimum distributionsforce money out of large IRAs whether you need it or not — driving up your bracket, your Medicare premiums (a hidden 3–5% "tax"), and the taxation of your Social Security.
• Capital gains ratesclimb from 0% to 15% to 18.8% and beyond as income rises.

The strategies — Roth conversions done early, cycling IRA money through lower capital-gains rates, donor-advised funds that reduce RMDs and Medicare costs — all share one requirement:early awareness and intentional effort.

Managing money is not just about growing the asset. It's about managing the taxes. That is the difference between successful planning and unsuccessful planning.

The Bucket Strategy: Time-Horizon Your Money

Don't put all your money in one bucket. The bucket strategy segments your money bywhen you'll need it:

• Bucket 1 (years 0–3):Cash, money markets, treasuries, high-yield savings. This is next month's income — never exposed to a market drop. And cash actually pays now (high-yield money markets near 3.8%).
• Bucket 2 (years 3–7):Intermediate bonds, high-quality dividend stocks, blue chips, and buffered ETFs or buffered annuities — where the provider absorbs a defined amount of downside in exchange for a cap on the upside.
• Bucket 3 (years 7+):Growth. International stocks, broad S&P index exposure, technology — money with time to ride out whatever the market does.

When the market drops 25%, your income comes from Bucket 1 while Bucket 3 recovers.You never sell stocks into a down market to buy groceries.

And one piece of math worth staring at: if inefficiency costs you just 1% on a portfolio you're drawing at 4%,that's not 1%. That's 25% of your income.

A Tale of Three Couples

Here's where the myth really comes apart:

Couple A hastwice the money— and the most fragile retirement of the three. Their guaranteed income is $44,400; everything else depends on the market cooperating for 30 years.

Couple B had the luck of a pension. Couple Cbuiltone — $30,000 a year of guaranteed income through an annuity, replacing the pension they never had, cutting their required withdrawal rate to under 2.5%.

When the market pulls back 30%, who sleeps best at night? It isn't Couple A.

The Timing Trap

There's a painful pattern advisors see: Couple A rides the market fully invested, takes the 25% hit —and thendecides to buy the annuity, after the loss. That locks the loss in permanently.

The time to build guaranteed income is before the storm, not after. Couples who secure their foundational expenses ahead of time can leave their growth money invested and simply not care what the market does this quarter.

Rewriting the 4% Rule

The rule of thumb says a portfolio can safely produce 4%. Many of today's annuity contracts pay out5–7% as joint lifetime income— covering both spouses, with a guaranteed floor, and in some contracts the opportunity for that income to increase with the market.

Moving a slice of your money from 4% territory to 5–7% territory meansyou need substantially less money to produce the same income— while lowering market exposure and keeping the rest invested for growth.

A word of caution: annuities are a tool, and a space that can be abused. You don't need a framing hammer to hang a picture.Start with the income you actually need, work the math backwards, and right-size the tool.

Final Thoughts: It's Not the Pile, It's the Paycheck

The $1.16 million headline isn't wrong — it's answering the wrong question. Retirement success is not a number you reach. It's an income you can count on, in up markets and down, for as long as you live.

The math says a couple with $900,000 and a plan can be more secure than a couple with $1.8 million and a hope.

Whatever your number is, be proud of it — and then put it to work answering the only question that matters: where will your paycheck come from when you stop working?

Next Steps

Want to know whatyoursavings can actually produce as income — or stress-test the plan you have against a 30% market drop? We also have a white paper on this topic with much more detail.

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Frequently Asked Question

Do I really need $1.16 million to retire?
Not necessarily. That figure assumes the average couple's $84,000 annual spending is funded by Social Security (~$37,700) plus a 4% withdrawal from savings. But guaranteed income changes the math: a couple with a pension or annuity covering foundational expenses can retire securely on far less, because their withdrawal rate drops and market downturns stop threatening their paycheck. The right question isn't "what's my number?" — it's "where will my income come from?"

The views expressed are educational in nature and should not be construed as a recommendation to buy or sell any security or insurance product mentioned. Investing involves risk, including loss of principal. Annuity guarantees are subject to the claims-paying ability of the issuing insurance company. Hypothetical couples are illustrations only and do not represent actual clients.

Money on Tap is your trusted resource for investing, retirement planning, and building long-term financial confidence.

Listen to the full episode here: