A few years ago, I had lunch with a friend who had recently decided to retire. He wasn’t rich, not even close. He lived in a modest home, drove a practical car, and had never cared much about impressing anyone. But he seemed genuinely happy. His days were filled with grandchildren, volunteer work, the occasional trip, and plenty of time to enjoy life. He seemed relaxed in a way that many people who are who are still working only dream of.
Around that same time, I came across a survey from Northwestern Mutual saying Americans believe they need $1.26 million to retire comfortably. I remember thinking, How can both of these things be true? If people really need $1.26 million to retire, how are so many retirees living fulfilling lives without anywhere near that amount?
What caught my attention wasn’t the number itself. It was the fact that this wasn’t a recommendation from financial planners or economists. It was simply what Americans believe they need. And as a coach, I’ve learned there’s often a big difference between what we think we need and what actually creates a fulfilling life.
One client, Nadira, came to me convinced she’d never have enough money to retire. She had spreadsheets, retirement calculators, investment projections. And the more she planned, the more anxious she became.
During a coaching session, I asked her a simple question: “What do you actually want to do when you retire?”
After years of planning her finances, she’d barely spent any time planning her life. As we talked, the picture became much clearer. She wanted to paint. Spend more time with her grandchildren. Travel occasionally. Volunteer at an animal rescue. Maybe teach a workshop now and then. She didn’t really want retirement. She wanted freedom. The ability to choose how she spent her time.
That’s also one of the reasons I created my Financial Independence, Retire Early (F.I.R.E.) course. To me, financial independence has never been about quitting work. It’s about reaching the point where work becomes a choice instead of a necessity.
Interestingly, many people who achieve financial independence continue working anyway. They teach, consult, mentor, create, volunteer, or start passion projects. They simply do it because they want to, not because they have to.
As I dug deeper into retirement research, I found something else that surprised me. According to Bureau of Labor Statistics data, households headed by people ages 55–64 spend about $85,000 per year. After retirement, spending drops significantly. Households aged 65–74 average around $65,000 annually, while those aged 75 and older average closer to $56,000.
One detail that often gets overlooked is that these older households average about 1.9 people, essentially a retired couple. So if retired households are actually spending between $56,000 and $65,000 each year, why are so many people convinced they need well over a million dollars?
Part of the answer is that many retirement calculators assume your spending stays the same for 30 years, but real life rarely works that way.
Retirement researchers often describe three phases of retirement:
The Go-Go Years. You’re active, traveling, exploring hobbies, seeing family, and making the most of your freedom.
The Slow-Go Years. Life naturally becomes simpler. Travel slows down, home becomes more appealing, and spending often decreases.
The No-Go Years. Entertainment and travel expenses usually continue to fall, although healthcare costs may increase.
That’s why I encourage people to build three retirement budgets instead of one. One for your Go-Go years, one for your Slow-Go years, and one for your No-Go years. Seeing those numbers separately often gives people a much more realistic picture of what retirement could actually cost.
(One calculator I’ve found especially helpful is Financial Mentor’s Ultimate Retirement Calculator because it lets you adjust your spending throughout retirement instead of assuming every year looks exactly the same.)
There’s another retirement risk that almost nobody talks about: grey divorce. No one gets married expecting to divorce, but divorce after age 50 has become much more common than it once was. I know firsthand how dramatically that can change a financial plan after my own 22-year marriage ended.
Most retirement plans assume one household forever, but life doesn’t always cooperate. One household can suddenly become two, and expenses don’t simply split in half. Housing, utilities, insurance, internet, maintenance, and property taxes still have to be paid.
That’s why I encourage couples to calculate not one Financial Freedom Number, but three:
- Your number as a couple.
- Your number if either of you were single.
- Your number, assuming you continue earning some part-time income.
This isn’t planning for divorce; it’s planning for resilience.
The older I get, the more convinced I become that retirement planning should begin with life planning. Before you calculate your retirement number, figure out what kind of life you actually want. Too many people spend decades trying to escape their lives through retirement when they’d be happier redesigning their lives today.
If retirement has you feeling anxious, try shifting your focus. Instead of obsessing over an arbitrary number, start designing the life you’re working toward. And remember that financial freedom isn’t about never working again; it’s about having choices. You may discover that the number matters less than you thought.
The real goal isn’t retirement. It’s freedom. And the life you’re hoping retirement will someday give you might be something you can begin creating today.
