The average American believes they need $1.26 million to retire comfortably, according to a 2025 study. For high-net-worth individuals and families, that figure represents a starting point rather than a destination. When you’ve built substantial wealth, retirement planning demands more than plugging numbers into a basic calculator – it requires a comprehensive analysis that accounts for lifestyle expectations, tax complexity, legacy goals, and the unique financial considerations that come with significant assets.
Traditional retirement planning assumes a straightforward replacement of working income with Social Security and modest savings. But when your pre-retirement lifestyle includes multiple properties, extensive travel, private education for grandchildren, and philanthropic commitments, estimating retirement needs becomes exponentially more complex. The stakes are higher, too – inadequate planning doesn’t just mean cutting back on luxuries. It could compromise your ability to maintain the quality of life you’ve worked decades to achieve, as well as affect your ability to preserve wealth for future generations..
Beyond Simple Replacement Ratios
Why Traditional Rules Don’t Apply
The conventional wisdom suggesting you’ll need 70-80% of pre-retirement income oversimplifies the financial reality for affluent households. Many high-net-worth individuals find their retirement spending equals or exceeds their working years, particularly in the early retirement phase when health permits active travel and pursuit of long-deferred interests.
Consider that work schedules no longer constrain you. Extended travel, maintaining second homes, and pursuing expensive hobbies all become more feasible in retirement. These opportunities don’t reduce expenses – they often increase them substantially.
The Lifestyle Factor
Your retirement number must reflect your actual lifestyle aspirations, not generic benchmarks. A couple planning six months annually in European residences faces different financial requirements than one content with domestic travel and a single primary home.
Think through specific questions: What level of travel do you envision? Will you support adult children or fund grandchildren’s education? Do you plan to start or expand philanthropic activities? Each decision carries specific cost implications that must factor into your retirement estimate.
Calculating Your True Retirement Need
Building a Detailed Expense Projection
Start with current spending as your baseline, but don’t assume retirement simply maintains the status quo. Break expenses into categories: housing and property maintenance, healthcare and long-term care, travel and leisure, family support, charitable giving, and discretionary spending.
For each category, project both fixed costs and variable expenses. Property taxes and insurance premiums on multiple homes create ongoing obligations regardless of usage. Healthcare costs almost certainly increase with age, even for those in excellent health today.
Accounting for Healthcare Complexity
According to recent estimates, a 65-year-old couple retiring in 2025 will spend roughly $300,000 on healthcare during retirement, excluding long-term care expenses. For high-net-worth individuals who prefer premium care options, concierge medicine, or specialized treatments, these costs can multiply several times over.
Long-term care presents particular planning challenges. In 2025, the national median cost of assisted living is about $64,200 per year, while 24-hour in-home care can exceed $200,000 annually in high-cost metropolitan areas. While you may never need these services, failing to account for the possibility creates dangerous gaps in your retirement projection.
Inflation’s Compounding Impact
Inflation erodes purchasing power relentlessly over multi-decade retirements. Even moderate 3% annual inflation cuts the value of a dollar in half over 24 years. For someone retiring at 65 and living to 95, that $10,000 monthly budget in the first year of retirement needs to become $20,000 monthly in year 24 just to maintain the same standard of living.
Healthcare inflation typically exceeds general inflation rates. Planning for 5-6 % annual increases in medical expenses provides more realistic projections than using overall inflation figures.
Tax Considerations That Change the Math
Required Minimum Distributions
Once you reach age 73 (75 for those born after 1959), the IRS mandates withdrawals from traditional retirement accounts. For high-net-worth individuals with substantial tax-deferred balances, these required minimum distributions can push you into the highest tax brackets, creating tax bills that dramatically reduce your effective retirement income.
A hypothetical $3 million traditional IRA in your late 70s may require annual distributions of $120,000 or more under RMD rules. Since those distributions are taxed as ordinary income, a high marginal federal tax rate could consume a significant amount, not counting state income taxes. This so-called ‘tax drag’ should be built into retirement income planning.
Strategic Withdrawal Sequencing
The order in which you draw from different account types affects your lifetime tax burden. Generally, drawing first from taxable brokerage accounts (benefiting from favorable capital gains rates), then tax-deferred accounts, and finally Roth accounts provides optimal tax efficiency.
However, your specific situation might call for different strategies. Converting traditional IRA funds to Roth accounts during lower-income years can reduce future RMDs and provide tax-free income later. These decisions require sophisticated analysis based on your complete financial picture.
Investment Strategy and Return Assumptions
Setting Realistic Return Expectations
Your retirement projection requires assumptions about investment returns. While historical stock market returns average around 10% annually, using that figure for retirement planning sets unrealistic expectations and invites disappointment.
Rather than relying on the 10% average (which is rather unlikely), the suggestion is to use more modest return assumptions that reflect today’s market conditions and the need for risk reduction in retirement. Building a plan around conservative growth expectations adds resilience and helps prevent disappointment if markets underperform.
Market Volatility and Sequence Risk
Returns don’t arrive in steady, predictable patterns. A significant market downturn early in retirement – when you’re simultaneously withdrawing funds and experiencing portfolio declines – can permanently impair your retirement security even if markets eventually recover.
This sequence of returns risk means two retirees with identical average returns over 30 years might experience vastly different outcomes depending on when those returns occurred. Building flexibility into your spending plan and maintaining adequate liquidity helps weather inevitable market storms.
Alternative Investment Considerations
High-net-worth portfolios often include alternative investments – rental properties, private equity, real estate partnerships, or direct business ownership. These assets can provide diversification and potentially higher returns but come with unique considerations.
Liquidity constraints, fee structures, and tax complexity all affect how alternative investments factor into retirement planning. A retirement estimate that ignores these holdings or treats them like liquid marketable securities creates misleading projections.
Legacy and Multigenerational Planning
Incorporating Estate Goals
Your retirement number depends partly on whether you plan to spend down assets or preserve wealth for heirs. A couple planning to leave a substantial estate needs higher retirement savings than one focused solely on funding their own lifestyle.
Supporting Multiple Generations
Many affluent families provide ongoing support to adult children, fund grandchildren’s education, or assist with major purchases like homes. These commitments represent ongoing cash flows that must factor into retirement income needs.
Gifting strategies also play a role. The annual gift tax exclusion allows transfers of $19,000 per recipient in 2025 without triggering gift tax or reducing lifetime exemptions. Strategic gifting during retirement can reduce your taxable estate while providing benefits to family members when they need them most.
Creating Your Comprehensive Estimate
Stress Testing Assumptions
Once you’ve built baseline projections, test them against adverse scenarios. What happens if healthcare costs double your estimates? If long-term care becomes necessary earlier than expected? If markets deliver below-average returns for a decade?
Understanding how your plan performs under stress reveals vulnerabilities and opportunities for additional protection through insurance, more conservative spending, or adjusted asset allocation.
The Rolling Review Process
Your retirement estimate isn’t a one-time calculation. Annual reviews that update return assumptions, tax laws, spending patterns, and goals keep your plan aligned with reality. Major life events – health changes, family situations, or economic shifts – trigger immediate replanning.
Think of retirement planning as a dynamic process rather than a static target. The flexibility to adjust the course as circumstances evolve proves more valuable than any single number calculated years in advance.
Work With Us
Estimating retirement needs for high-net-worth families requires moving beyond simplistic calculators and replacement ratios to a comprehensive analysis that accounts for lifestyle complexity, tax optimization, legacy objectives, and the unique considerations that accompany substantial wealth. The difference between adequate and exceptional retirement planning often comes down to how thoroughly you examine every variable and how proactively you adapt to changing circumstances. Your retirement estimate should reflect not just what you need to survive comfortably, but what’s required to maintain your desired lifestyle, support your family’s multigenerational goals, and preserve the financial legacy you’ve spent a lifetime building.
At Brogan Financial, we specialize in developing sophisticated retirement strategies for high-net-worth individuals and families who demand more than generic planning advice. Our comprehensive approach integrates tax-efficient withdrawal strategies, healthcare cost projections, legacy planning, and investment management into cohesive plans tailored to your specific circumstances and aspirations. Whether you’re navigating complex RMD requirements, coordinating multiple property holdings, or balancing current lifestyle needs with multigenerational wealth transfer goals, our experienced team provides the analytical depth and strategic insight you need. Contact us today to schedule a consultation and discover how we can help you develop a retirement estimate that truly reflects your financial reality and supports your vision for the future.
