How Much Do I Need to Retire? The Real Numbers, Not Rules of Thumb

The short answer: most people in Massachusetts need between $1.2 million and $2.5 million in savings to retire comfortably at 65, depending on their spending, housing situation, and healthcare needs. But that range is so wide it’s almost useless — so here’s how to get to your actual number.

Why the “Multiply by 25” Rule Doesn’t Work

You’ve probably seen the rule of thumb: take your annual spending, multiply by 25, and that’s your retirement number. Spend $80,000 a year? You need $2 million.

It’s a fine starting point for a cocktail napkin, but it falls apart when you look at real life — especially in Massachusetts. It ignores Social Security income (which for most couples covers $40,000-$70,000/year). It ignores taxes, which in Massachusetts include a 5% state income tax on most retirement withdrawals plus property taxes that average around 1% of home value. It ignores healthcare costs that Fidelity estimates at $365,000 per couple over the course of retirement. And it ignores the fact that your spending isn’t flat — most retirees spend more in their 60s (travel, projects, helping kids) and less in their 80s.

The real answer requires building a plan, not applying a formula.

The Actual Cost of Retirement in Massachusetts

Massachusetts is one of the most expensive states to retire in, running about 49% above the national average for cost of living. But “average” doesn’t mean much — your costs depend almost entirely on where you live and whether your home is paid off.

Here’s what a realistic annual retirement budget looks like for a couple in Greater Boston:

Category	Modest	Comfortable	Premium
Housing (property tax, insurance, maintenance)	$18,000	$26,000	$40,000
Healthcare (Medicare premiums, supplements, out-of-pocket)	$12,000	$16,000	$22,000
Food & groceries	$8,400	$12,000	$18,000
Transportation	$6,000	$9,000	$14,000
Utilities & home services	$6,000	$8,400	$12,000
Travel & entertainment	$4,000	$12,000	$25,000
Everything else (clothing, gifts, personal)	$4,800	$8,000	$14,000
Total Annual Spending	$59,200	$91,400	$145,000

These assume you own your home outright. If you’re still carrying a mortgage, add that payment to the total. If you’re renting, replace the housing line entirely — a modest apartment in the Boston suburbs runs $2,200-$3,000/month in 2026.

So What’s My Number?

Here’s where we get specific. I’ll walk through three scenarios using the spending levels above, assuming a couple both age 65, both claiming Social Security, with a moderate investment portfolio.

Scenario A: The Modest Retirement ($59,200/year spending)

• Annual spending: $59,200
• Combined Social Security: $48,000/year
• Gap to fill from savings: $11,200/year
• Massachusetts state tax on withdrawals: ~$2,500/year
• Federal tax on withdrawals: ~$3,000/year
• Total annual draw from portfolio: ~$16,700

Savings needed: $550,000 – $700,000

This is the “I have a paid-off house, I don’t travel much, and I’m careful with money” retirement. Very achievable for many couples. Social Security does most of the heavy lifting. Your portfolio is mainly a safety net and a hedge against healthcare costs in your 80s.

Scenario B: The Comfortable Retirement ($91,400/year spending)

• Annual spending: $91,400
• Combined Social Security: $52,000/year (higher earner delayed to 70)
• Gap to fill from savings: $39,400/year
• State + federal taxes on withdrawals: ~$12,000/year
• Total annual draw from portfolio: ~$51,400

Savings needed: $1.2 million – $1.6 million

This is the sweet spot for most of the clients I work with. You travel a few times a year, you help the kids occasionally, you eat out regularly, and you don’t stress over everyday spending. You’re not extravagant, but you’re not pinching pennies.

Scenario C: The Premium Retirement ($145,000/year spending)

• Annual spending: $145,000
• Combined Social Security: $56,000/year
• Gap to fill from savings: $89,000/year
• State + federal taxes on withdrawals: ~$28,000/year (higher brackets + potential IRMAA surcharges)
• Total annual draw from portfolio: ~$117,000

Savings needed: $2.2 million – $3.0 million

This is the “we want to winter somewhere warm, renovate the house, and be generous with the grandkids” retirement. It’s absolutely doable — but the tax planning becomes critical at this level. IRMAA surcharges alone can add $5,000-$10,000/year to your Medicare premiums if withdrawals aren’t managed carefully.

The Hidden Costs Most People Miss

The numbers above cover the basics, but Massachusetts has a few retirement-specific traps that catch people off guard:

The Massachusetts Estate Tax

Massachusetts has one of the lowest estate tax thresholds in the country: $2 million. If your total estate — house, retirement accounts, life insurance death benefit, everything — exceeds $2 million, the state taxes the entire estate, not just the amount over the threshold. The federal exemption is $15 million per person in 2026, so most people won’t owe federal estate tax. But in Massachusetts, a couple with a paid-off house worth $800K and $1.3 million in retirement accounts is already over the line.

This is a planning issue, not just a tax issue. The right strategy — irrevocable trusts, gifting, Roth conversions — can eliminate or dramatically reduce this liability. But you have to plan for it before it becomes a problem.

Healthcare Before Medicare (Age 60-64)

If you retire before 65, you need to bridge the gap until Medicare kicks in. In Massachusetts, health insurance through the state exchange runs $1,200-$1,800/month per person for a quality plan. That’s $28,800-$43,200/year for a couple — often the single largest expense for early retirees. Many people don’t account for this, and it can blow up an otherwise solid retirement plan.

IRMAA: The Stealth Medicare Surcharge

If your modified adjusted gross income exceeds $206,000 (married filing jointly in 2026), Medicare hits you with Income-Related Monthly Adjustment Amount (IRMAA) surcharges. These can add $1,000-$5,000+ per person per year to your Medicare premiums. The tricky part: a single large Roth conversion or capital gain in one year can push you over the threshold for the next two years. Strategic withdrawal planning avoids this entirely.

The 4% Rule: Useful But Incomplete

You’ll hear that you can safely withdraw 4% of your portfolio per year in retirement. On a $1.5 million portfolio, that’s $60,000/year.

The 4% rule is a reasonable guardrail, but it was designed for a 30-year retirement starting at age 65 with a specific stock/bond split. It doesn’t account for:

• Sequence of returns risk (a bad market in years 1-3 of retirement is far more damaging than a bad market in years 15-17)
• Variable spending (you’ll likely spend more early and less later)
• Tax efficiency of withdrawals (pulling from the wrong account at the wrong time costs you)
• Social Security timing (delaying from 62 to 70 increases your benefit by ~77%)

A proper retirement income plan uses Monte Carlo simulations — running your plan through 1,000+ market scenarios — to give you a probability of success, not a single number. That’s what financial planning software like eMoney does, and it’s fundamentally different from a rule of thumb.

What About Social Security Timing?

This decision alone can be worth $100,000+ over your lifetime. Here’s the simplified framework:

• Claim at 62: Reduced benefit (roughly 70% of your full amount). Makes sense if you have health concerns or need the income immediately.
• Claim at 67 (full retirement age): 100% of your benefit.
• Delay to 70: Enhanced benefit (roughly 124% of your full amount, plus inflation adjustments along the way).

For most couples, the optimal strategy is for the higher earner to delay to 70 while the lower earner claims earlier. This maximizes the survivor benefit — when one spouse dies, the surviving spouse keeps the higher of the two benefits. This matters enormously for the financial security of the surviving spouse, and most people don’t coordinate this properly.

How to Get Your Actual Number

The ranges I’ve given above are based on general Massachusetts assumptions. Your number will be different based on your specific pension, Social Security estimates, tax situation, portfolio mix, health, and spending patterns.

Here’s a quick self-assessment to get in the ballpark:

1. Estimate your annual retirement spending using the table above as a starting point
2. Check your Social Security estimates at ssa.gov/myaccount for both you and your spouse
3. Subtract Social Security from spending — the gap is what your portfolio needs to cover
4. Multiply the gap by 25-30 for a rough savings target (use 30 if you’re retiring before 65)
5. Add $150,000-$200,000 as a healthcare buffer per person

If the number makes you nervous, that’s normal — and it’s exactly the point where having someone run the full plan with real projections becomes valuable. The difference between “I think I’m okay” and “I’ve stress-tested this against 1,000 market scenarios and here’s my 92% confidence level” is the difference between hoping and knowing.

The Bottom Line

There’s no single answer to “how much do I need to retire” — but there is a your answer, and it’s findable. For most Massachusetts couples aiming for a comfortable retirement, the range is $1.2-$2.5 million in savings plus Social Security, with the exact number driven by spending habits, tax planning, and healthcare costs.

The biggest mistake isn’t retiring with too little — it’s retiring without a plan and either spending too cautiously (sacrificing the retirement you earned) or too aggressively (running out in your 80s when it’s too late to fix it).

If you want to find your specific number — not a rule of thumb, but the actual math for your situation — that’s exactly what we do.

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Nick Stevens, CFP® is the founder of Evergreen Wealth Management in Boston, a flat-fee financial planning and investment management firm. Evergreen charges a fixed monthly fee regardless of portfolio size — because your financial advice shouldn’t get more expensive just because your investments did well. Learn more about how we work or get in touch.