Meet Sophia and Mark

Sophia (52) and Mark (57) live in the beautiful red-rock desert town of Sedona, Arizona. Mark works full-time as a project manager, while Sophia runs a freelance graphic design business from home. Together, they enjoy hiking, visiting local art galleries, and dreaming about the next phase of life—retirement.

Their goal is simple: retire together when Mark turns 62.

With $1.4 million in savings and a target retirement budget of $140,000 per year, they want to know—can they make this dream a reality?

Let’s take a closer look at their numbers.

---

Their Financial Snapshot

Current Age: Sophia 52, Mark 57
Retirement Target Age: Mark 62, Sophia 57
Current Savings: $1.4 million
Annual Contributions: $12,000
Current Annual Spending: $125,000
Desired Retirement Spending (Inflation-Adjusted): $140,000/year
Healthcare Costs Before Medicare: $22,000/year
Expected Investment Return (Real): 3.5%

Social Security Estimates at Age 67:

• Mark: $3,600/month ($43,200/year)
• Sophia: Spousal benefit (~$1,800/month or $21,600/year)
• Combined: $64,800/year

---

Step-by-Step Retirement Analysis

1. What Will Their Savings Be at Retirement?

In five years, assuming a 3.5% real return:

• $1.4 million grows to about $1.66 million
• Add five years of contributions: $60,000
• Total at retirement: ~$1.72 million

---

2. What Will They Spend in Retirement?

• Their $140,000 retirement target, adjusted for 3% inflation over 5 years, becomes:
  $140,000 × (1.03)^5 ≈ $162,300/year
• Add healthcare costs before Medicare:
  $162,300 + $22,000 = $184,300/year
• Once they reach Medicare age (Mark at 65, Sophia at 62), expenses drop back to $162,300/year

---

3. How Much Will They Withdraw Before Social Security?

From age 62 to 67, they’ll need to fund all expenses from savings:

• $184,300 × 5 = $921,500
• Subtract from $1.72 million:
  $1.72M – $921,500 = ~$800,000 remaining at age 67

---

4. Can Their Remaining Savings Cover the Gap After Social Security?

Starting at age 67:

• Social Security covers $64,800/year
• Remaining spending need: $162,300 – $64,800 = $97,500/year

What can $800,000 in savings cover?

• At a 3.5% sustainable withdrawal rate: ~$28,000/year
• Shortfall: $97,500 – $28,000 = $69,500/year

---

The Verdict

Sophia and Mark are close—but not quite there.

• Before Social Security: They’ll get by, but with a substantial drawdown.
• After Social Security: Their savings fall short of their desired lifestyle.

They’ll need to make some adjustments.

---

How Sophia and Mark Can Close the Gap

Here are a few ways they can strengthen their retirement plan:

1. Lower Spending to $130,000/year
   Reducing their annual budget could preserve their savings longer.
2. Delay Retirement by 2–3 Years
   Working until Mark is 64 or 65 gives them more time to save and reduces the withdrawal period.
3. Earn Part-Time Income Early in Retirement
   Consulting or freelance work could help fill the Social Security gap.
4. Relocate or Downsize
   Moving to a slightly more affordable location could make their budget go further.

---

Final Thoughts

Retiring at 62 is within reach for Sophia and Mark—but they’ll need a few smart tweaks to make it sustainable. With a bit of flexibility and planning, they can enjoy their Sedona sunsets stress-free.

---

A Glimpse Into Their Future

Sophia sketches the red rocks from their patio as Mark scrolls through their retirement spreadsheet.

“What if we wait just two more years?” he asks.

She smiles. “More time to save, less time worrying. Maybe it’s worth it.”

Because retirement is more than a number—it’s about peace of mind.

---

Are you prepared for your retirement dreams? Start planning today—so your own adventure can begin tomorrow.

---