Meet Kevin and Mia

Kevin (55) and Mia (48) live in Durham, North Carolina—a vibrant city known for its universities, food scene, and close-knit community. Kevin works as a mid-level executive for a manufacturing firm, and Mia is a full-time mom raising their 8-year-old daughter, Isla.

Kevin enjoys his job but dreams of stepping away at age 61 to spend more time traveling with Mia and being present for Isla’s middle and high school years. Mia may return to part-time nonprofit work in the future but doesn’t plan to earn a significant income.

Their goal: Retire in 6 years and cover $105,000/year in expenses for the rest of their lives—including raising Isla, healthcare, and college funding.

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Family Profile

• Kevin: 55, plans to retire at 61
• Mia: 48, stay-at-home mom
• Isla: 8 years old
• Home: Paid off, valued at $500,000
• Current Annual Spending Goal in Retirement: $105,000 (today’s dollars)
• Healthcare Costs (Pre-Medicare): Estimated at $22,000/year until age 65
• College for Isla: $100,000 target, saving $6,000/year now
• Social Security (Starting at 67):
  • Kevin: $3,500/month ($42,000/year)
  • Mia: Spousal benefit: ~$21,000/year
  • Combined SS Income: ~$63,000/year starting in Kevin’s age 67

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How Much Do They Need to Retire at 61?

Let’s walk through the retirement math.

1. Retirement Duration Assumption

• Kevin retires at 61 (in 6 years)
• Mia will be 54 at that time
• Let’s plan for a 30+ year retirement horizon (to age 91 for Kevin, 88+ for Mia)

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2. Income Gap Before Social Security (Ages 61–67)

For the first 6 years, they’ll live entirely off savings:

• Annual need: $105,000
• Pre-Medicare healthcare (~$22K) is included in the spending estimate
• Total withdrawals (ages 61–67): $105,000 × 6 = $630,000

But since they’ll still invest during those years, their nest egg will need to account for ongoing withdrawals + market growth.

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3. Income Gap After Social Security (67 onward)

At age 67, they receive ~$63,000 in Social Security. That leaves a:

• Shortfall of $42,000/year to be covered by withdrawals
• Over a 25-year span (age 67–92), they’ll need to draw roughly:
  $42,000/year × 25 = $1,050,000, inflation-adjusted

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4. College for Isla

They’re currently saving $6,000/year. In 10 years (when Isla starts college), that’s:

• Future value ≈ $80,000–90,000, depending on investment returns
• So they’ll want to set aside about $10,000–20,000 more in today’s dollars to hit their $100K college goal

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✅ So How Big Should Their Nest Egg Be at Age 61?

Let’s work backward with some conservative assumptions:

• 3.5–4% real return (after inflation)
• 30+ year retirement
• Level withdrawals to maintain $105K/year lifestyle
• Social Security starts at 67 and reduces the withdrawal need

Target Retirement Nest Egg:

• $630,000 needed for early retirement gap (61–67)
• $1,050,000 needed post-67 withdrawals
• Add buffer for healthcare, college, unexpected expenses: ~$200,000
• Total Target: ~$1.9M to $2.1M

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Recommended Savings Goal by Age 61: $2.0 million

This amount gives them:

• Safe withdrawal flexibility (about 4–4.25%)
• Enough to cover retirement through age 90+
• Space to fund Isla’s college
• Protection against market downturns, inflation, or unplanned expenses

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How Kevin and Mia Can Get There

With 6 years left before Kevin retires, here’s what they need to do:

1. Max Out Contributions

• 401(k): $30,500/year + company match
• Roth or Backdoor Roth IRA: $8,000 each
• Taxable savings or college fund: ~$10,000/year
  Goal: Save $50,000–60,000/year total

2. Optimize Account Locations

• Use tax diversification: Pre-tax for retirement, taxable for early withdrawals
• Build a 3-bucket strategy: Tax-deferred, Roth, taxable

3. Monitor Progress Every Year

• Adjust investment strategy for risk
• Use Monte Carlo simulations or cash flow projections annually

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Final Thoughts

Can Kevin and Mia retire in 6 years with a daughter still at home?

Yes—but only if they reach the $2 million mark.
That gives them room to cover their lifestyle, help with college, and live confidently through a long retirement—without needing a pension or second careers.

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Is your own number $2 million, or something different?
Your goals, your family, and your values shape your financial path. The earlier you start planning, the more flexibility you’ll have—just like Kevin and Mia.

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