When people think about retirement planning, the conversation often starts with one question: How much can I afford to spend?
There may be a better question: What do I want my money to make possible?
Retirement is not simply about spending less. It is about making sure your money supports the life you actually want to live. For successful business owners and other accomplished professionals, that can mean rethinking how their home, spending, time, and priorities fit together.
That is what I mean by right-sizing your life.
Retirement Isn't About Cutting Everything Back
Consider a successful business owner in his 70s. He has a beautiful home, his children are grown, and he can afford to keep the house for the rest of his life.
But the property also requires a lot of maintenance.
If he wants to travel more, spend more time with his grandchildren, or simply stop spending his weekends taking care of the property, the question is not whether he can afford the house.
The better question is whether the house still fits the life he wants.
Moving to a smaller home may actually give him more of what he values: more time, more flexibility, and less responsibility.
The same idea applies to spending.
Fidelity Research estimates that many people may need somewhere between 55% and 80% of their pre-retirement income to maintain their lifestyle in retirement. That is a guideline, not a personal retirement plan. Your actual needs depend on your income, when you retire, your spending habits, and the lifestyle you want.
Some people spend less in retirement because their mortgage is paid off and they are no longer saving for retirement.
Others spend more because they finally have the time to travel, pursue hobbies, dine out, or spend more time with family.
Three Questions to Ask
When I work through retirement planning, I like to think about spending in three categories.
What do you have to spend?
These are your essential expenses: housing, food, insurance, taxes, healthcare, and other costs you really cannot avoid.
What do you want to spend?
This is where your priorities come in. Travel, golf, dining out, a second home, or gifts to children and grandchildren may all be part of the life you want.
What might you want to change?
Do you still want the same house? Do you need two cars? Do you want to remain in the same area? Do you want to provide financial support to your children or grandchildren? And if travel is important to you, do you want to spend more on it during your first five years of retirement?
These decisions can have a meaningful impact on what retirement actually costs.
What Does the Retirement You Want Actually Cost?
Someone might tell me, “Eric, I want to retire at 62, but I don't think I can afford it.”
Before answering that question, I would want to understand what retirement actually looks like for them.
Maybe they are spending $25,000 a year maintaining a property they barely use. Maybe they have a vacation home that no longer fits their lifestyle. Or maybe they are still saving aggressively for retirement even though they are approaching the point where they planned to stop working.
Once you look at those factors, the question can change.
Instead of simply asking, “Can I afford to retire?” it becomes:
“What does the retirement I actually want cost me?”
That is a much more useful planning question.
Your Financial Plan Should Support Your Life
A retirement plan should be more than a number telling you how much money you need.
Think about where you want to live. What do you want a typical week to look like? How much do you want to travel? Who do you want to spend time with? What activities actually bring you enjoyment?
Just as important, consider what you are willing to spend less on because it no longer adds much value to your life.
Those answers can change, too. You might retire expecting to travel constantly and discover that you enjoy being home more. Or you may find that you have more time than expected and want to spend more on experiences.
That is why right-sizing is not a one-time decision. It is something to revisit as your life changes.
The goal is not to spend as little as possible. It is to spend with intention.
You have worked hard to build your business, your wealth, or your career. Retirement is the opportunity to decide what all of that work is supposed to provide for you.
So instead of asking only, “How much can I cut?” or “How much do I need to retire?” consider a different question:
What do I want my money to make possible for me?
Once you can answer that, you can build the financial plan around it.
Your financial plan should support your life. Your life shouldn't have to fit inside your spreadsheets.