Ready For Retirement
Ready For Retirement
This Is What a $10M Retirement Actually Looks Like
A $10 million retirement is often imagined as the finish line — complete freedom, unlimited spending, and no financial stress. The reality is more complex.
James walks through what an eight-figure retirement actually looks like by examining a real planning scenario for a couple entering retirement with roughly $10 million in assets. Rather than focusing on luxury or excess, the conversation centers on how income, taxes, investment structure, and lifestyle decisions evolve once work stops and the margin for error gets smaller.
At this level of wealth, the biggest challenge isn’t running out of money. It’s deciding how to use it well. James explains why many high-net-worth retirees struggle to define spending, how withdrawal rates change over time, why required distributions and taxes quietly reshape cash flow, and how Social Security, charitable giving, and estate planning become critical pieces of the overall strategy.
The episode highlights an often-overlooked truth: wealth doesn’t eliminate complexity — it shifts it. Confidence in retirement comes from alignment and intentional planning, not from chasing the largest possible ending balance.
This episode is for anyone approaching retirement with significant assets who wants a grounded, realistic perspective on what a $10 million retirement actually involves.
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Advisory services are offered through Root Financial Partners, LLC, an SEC-registered investment adviser. This content is intended for informational and educational purposes only and should not be considered personalized investment, tax, or legal advice. Viewing this content does not create an advisory relationship. We do not provide tax preparation or legal services. Always consult an investment, tax or legal professional regarding your specific situation.
The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.
Comments reflect the views of individual users and do not necessarily represent the views of Root Financial. They are not verified, may not be accurate, and should not be considered testimonials or endorsements
Participation in the Retirement Planning Academy or Early Retirement Academy does not create an advisory relationship with Root Financial. These programs are educational in nature and are not a substitute for personalized financial advice. Advisory services are offered only under a written agreement with Root Financial.
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Most people think a$10 million retirement means yachts, first class travel, never having to think about money again. But the reality is that's not what a$10 million retirement looks like at all. So let me show you what actually changes and what doesn't going into retirement with an eight-figure portfolio. Here's a case study that we're gonna look at. This is Roger, this is Catherine, and Roger and Catherine, you can see right off the bat with their investments here, they have almost$7 million in a stock portfolio. Now, the way they accumulated that was they had equity compensation in a publicly traded company that did quite well. Here's the thing about people with$10 million plus portfolios. Usually it's either the result of selling a business or multiple businesses, or you had some type of an equity compensation plan where the company that you worked at performed quite well. Now, for you watching, if you have that level portfolio, chances are very high you either also had some type of an equity compensation plan or you sold a business or even multiple businesses. Sometimes there's inheritance, sometimes there's other details, but typically it's owning equity either in a company that you started or a company that you joined that's going to get you to this position where you have$10 million or more. That's the case with them, but they also have their 401ks and IRAs. You can see their home here and they do have a bit of a mortgage. And Roger and Catherine are 62 years old. The goals that they shared, this is one of the hardest things for most people. They've saved this money, but believe it or not, a lot of people that have this level of wealth going into retirement, they haven't been living an incredibly lavish lifestyle to get there. They got there, like I said, because they grinded, they started a business, they ran a business, they sold a business, and all of a sudden there's this windfall that they know can radically transform what life looks like. Or they had an equity compensation plan where the stock that they were invested in, their employer stock, performed incredibly well to the point that they look at their potential retirement and it has potential to be significantly more comfortable than their working years or their years leading up to retirement. So in a lot of cases, people at this level of wealth, they look at retirement and their first question is, I have no idea how much I can even think about spending in these years. So we said let's start with something. Let's start with$10,000 per month, which would be a comfortable lifestyle, and see, can you do it? If you can do that, then we can start working backwards to understand what's actually doable given your level of wealth here. They also wanted to budget an extra$25,000 per year for travel. And then they have annual healthcare costs. If they were to retire before Medicare age, that would be$9,600 per year. If they retire at age 65 or later, they would have their Medicare Part B and D premiums, and they would also have an additional$4,000 per year of out-of-pocket expenses. They have their salaries today, they're not planning to retire until 65. So that's the cash flow coming in, and they're planning to collect their social security benefits at age 70. So this is where we want to start. The same whether you have 10 million, whether you have 10,000, this is the general framework. What's going to be different is what you then do with some of this information. So let's first start with this retirement overview. Let's start by understanding cash flows and see what all goes in to their ability to retire. So if we start here, and by the way, as I'm going through this, if you want access to this software, the link is in the show notes below. It's in the Retirement Planning Academy. You can get this and do this on your own, regardless of how much you have in your portfolio. So what we can see here is their cash flows. And their cash flows help us to understand big picture. We've been living our lives leading up to retirement. We have our salary, and that salary covers all of our needs. But when we retire, that salary, of course, goes away. So where the heck is income going to come from? Is it going to come from Social Security? Is it going to come from dividends? Is it going to come from my IRA, from my Roth IRA, from my brokerage account? These are the questions top of mind. And this is helping us to answer it. So what we can see here is the next three years, they have salary coming in. They don't need to worry about living off their portfolio income. That is fully covered. But 65 comes around, income goes away, and they have nothing coming in until age 70, at which point both of their social security benefits kick in. And you can see the breakdown of those right here. So if we go back here, what we really want to understand is not just what income sources are coming in, but what is it going to cost for them to maintain their lifestyle? So if we look at expenses, this living expense, this is the$10,000 per month or$120,000 per year, but we adjusted it for inflation and we're going to continue to do so throughout this projection to make sure that their living expenses or their lifestyle keeps up with inflation. Housing, you probably saw they still have a mortgage. So they might pay that mortgage off before retirement. That's actually one of the planning points. But in this initial case, we're saying, what if you just keep making payments as is? You can see here by 2034, that mortgage is paid off. They still do have property taxes and insurance, but the principal interest portion of that is gone. So this is helping us to say year by year these expenses are going to change. Some of these expenses are adjusted with inflation. Some of these expenses, like the mortgage, go away. Some of these expenses don't. And so, how does that change what year to year is going to look like? Next thing they wanted to plan for was goals. So if we go back here, you can see the goals, this is their vacation. They wanted to spend$25,000 per year. They're probably not going to spend$25,000 per year until the day that they die. But we said, what about during those go-go years? Typically thought of up until the age of 75, let's budget$25,000. But again, that's going to adjust with inflation. So$25,000 in today's dollars is$27,300, the first year of retirement, and then so on and so forth. Finally, is taxes. Taxes do not go away when you stop working. Payroll taxes do, but you still have capital gains taxes, you still have ordinary income taxes, you still have taxes on Social Security, depending upon what state you're in and what your income is. So what's the combination of all of those? This is what their federal tax bill is expected to be, and you can see that number jumping pretty significantly once they turn 75. Why does that happen? Required minimum distributions. Now, in addition to dividends or interest or coupon payments they're receiving from their brokerage accounts, they also have Social Security and they also have required distributions coming from their IRAs. So this is actually one of those things that you want to have a plan for. How do you mitigate this through good planning on the front end of retirement? But going back to this, what we can start to see is starting from retirement, here are their net flows. The net flows is essentially saying what are all their expenses? So basic expenses plus mortgage plus medical plus travel plus tax payment, 288,000 are the total outflows. We compare that to total inflows. First year of retirement, there are none. There is no social security, there is no salary. So net flows means all of that needs to come from their portfolio. You can see how that number changes, and then that net flows drops at age 70. And that's simply because Social Security kicks in. So there's now less pressure on their portfolio to have to generate all this income. Social Security generates some, their portfolio generates the difference. So what do we do with all this? These are really big numbers. The first question is: are those numbers able to be supported based on the portfolio balance? And this is where I say every time it depends on how much you have. If you only have$300,000 in your portfolio, this plan's not going to work. You're going to spend all that down in the first 12, 13 months. Versus if you have 10 million plus dollars in your portfolio, like Roger and Catherine do here, maybe it does work. But to answer that, we need to understand what that dollar amount represents as a percentage of the overall portfolio. And that's going to give us a sense of is this sustainable or do any changes need to be made? So if I go back here, and once again, you can do this in your version of this software, get access in the retirement planning academy. Link is in the show notes below. But the next thing I'm going to look at is what is the withdrawal rate at these amounts, those dollar withdrawals year by year, what does that represent as a percentage of the overall portfolio? Well, for Roger and Catherine, you can see it starts about 2% and it starts the highest it's going to be. Why is it the highest it's going to be? Well, Social Security has not kicked in, like we talked about. So the entirety of their lifestyle must be funded by only their portfolio assets. That starts to go down each year. And why is it going down? Well, hypothetically, if they're getting some level of growth and the portfolio is growing, those dollar amounts represent smaller and smaller portions of the portfolio every year. Obviously, growth is not linear. There's no guarantees in here. This is not to say that you will not go through downturns. You will absolutely go through downturns. But on average, if the portfolio is trending upward and you're spending less of it each year than it's growing by, then the portfolio withdrawal rate is going to drop. It drops even more once Social Security kicks in, to the point that they're spending less than 1% per year of what they have in their portfolio. And it does increase here at 75. But once again, as a reminder, that's not because their lifestyle changes. It's because now they're forced to start taking more money out of their IRAs. They wanted to, they could turn right back around and reinvest that, but it is a forced withdrawal. If we put all this together, here's what this looks like for Roger and for Catherine. Here they are today. They have a significant amount of assets in their portfolio, and that number just continues growing to the point that by age 95, they're expected to have almost$90 million in their liquid portfolio balance, which by the way, does not even factor in any of the value of their home. So this is what we talk to them. This is what we need to do. Number one, let's make sure you're fully living the lifestyle you want to live. The goal here isn't to say, how can we have almost$100 million to die with when we pass away? It's to say, what can we do with this money we have today to get the most out of life with the money that we have? Number two, based upon that, how do we start implementing the right portfolio structure to support all this? And then number three, how do we do some really serious tax planning and estate planning to the point that either income taxes while they're living or estate taxes once they pass don't end up being overly burdensome and we can mitigate that to the best extent possible. But the first thing, before investments, before taxes, before state strategy, make sure your portfolio and your income is aligned with what you actually want to do. What does that mean for them here? Well, in this case, let's start dreaming about how much do you want to spend. Now, believe it or not, like I mentioned at the beginning, this is one of the harder pieces. People that end up here with this$10 million portfolio or greater, it's not always because they had a very lavish lifestyle during their working years. They were working hard, building businesses, growing businesses, reinvesting into the business. They were working a job that maybe had good compensation, but most of the comp was in equity compensation, not money that they were actually spending, money that just kept growing and accumulating. So now they're at the position where they actually have to think about well, what do I want to spend money on? What would I do if money wasn't an issue? And money is an issue, but maybe not to the extent that they maybe thought it was. It's more of an issue of the burden of wealth, the burden of thinking, how do I not make a mistake? How do I not do something here? Because the leverage of all this, the leveraged impact of a mistake is far greater than I want to bear right now. But we just start exploring and we say, what if 10,000 per month wasn't 10? What if it was 15? And now typically you're not just choosing arbitrary numbers. You're saying let's connect this to what you actually want to do. Don't think in terms of 15,000 per month or 12,000 per month. Think in terms of what do you actually want to do? Is this going out to dinner more often and taking your friends with you? Is this upgrading your vehicles? Is this upgrading the travel that you want to do? Is this joining a country club that you really want to be part of? Is this giving more money away? So think in those terms first and then work backwards into what that dollar amount might be. But just as a simple starting point, we said, what if we increase your monthly after tax living expenses by 50% each month? And what if we double what you can spend on vacations each year? Now,$50,000, that's that's a lot of money. But think creatively here. What can you do to invite family? What could you do to create incredible experiences that friends could be part of? What could you do to make your travel as good as it could possibly be? And if we start to illustrate that, we can start to understand or we can start to see, is that even possible? Well, when we run these projections, there of course is fewer money. There's less money left at the end of the day. But if we look at the probability of success, it's still quite high. Now, this is where real planning comes in. Don't just spend money to spend money. Don't spend money wastefully, but we need to make sure that you're fully spending anything that you might want to spend, to give like you want to give, to spend like you want to spend, to spend time, to spend energy, to spend your resources in a way that aligns with what you want your life to look like. Once that is done though, once you have that, then you can look at this and start to work backwards into understanding again, how do we need to allocate our portfolio? What percent should be growth? What percent should be conservative? What types of alternative investments might help us to increase our lifetime returns or might help to reduce some of the risk or might help us to do what we need to do with our portfolio to minimize some of the tax liability we're expecting to pay because of how much we have in our assets? Then tax planning. Is this Roth conversions? How do you make sure you use your tax planning window to minimize the future impact of RMDs potentially doubling the taxes you pay year after year? What about gifting? If we are going to gift, how do we think about taking strategic dollars from our stock portfolio? Maybe stock that we purchased for, say,$10 a share, but it's now worth$120 a share simply because of what our company's stock price has done. Well, can we gift those assets instead of gifting cash? And if so, how do we take it one step further? Maybe we don't gift that directly to the charity. What if we gift a large amount to a donor-advised fund? That donor advised fund becomes like our family foundation. We get an enormous deduction for putting money in day one. By the way, that deduction can maybe be used to offset the impact of a Roth conversion or some other tax event. But now we have this family foundation type fund, type account that we can use to instill the values we have, not just with us, but with our children as well. And think about the cool things that we can do with that. So when you're going into retirement with a$10 million portfolio, the temptation is to think all my stresses are going to be gone. All my money worries are going to be gone. And what I want to tell you is that's not the case. Yes, there's a lot less of a chance that you're going to run out of money during your lifetime. But there's a much greater chance that the anxiety, the burden of having that money and not wanting to make a mistake, because mistakes are going to be far easier to make at that level of wealth. That is going to be the main thing that you're thinking about. So as you go through this, start dreaming about what you want life to look like. But then make sure that you have all the right pieces in order to fully support that. If you're looking for help with that, that's exactly what we do at Root Financial. We have our new private wealth service. It's called Vista Private Wealth. It's specifically designed for people with$10 million or more in their investment portfolio who carry that burden, who carry that burden of not wanting to make a mistake and fully wanting to use that money to bless their lives, their families' lives, as well as those around them. If that's of interest, reach out to us, see what we might be able to do. But in general, these are the steps that you can follow to understand what your life can look like with a$10 million plus portfolio going into retirement.
