You and your partner may have built a comfortable nest egg and expect that Social Security will help support the retirement lifestyle you both want. On paper, your assumptions could make sense, but that will depend on three numbers that retirees often overlook: Your required withdrawal rate, the tax bill on that money, and what your target spending is really worth once inflation catches up to it.
How to Check Your Required Withdrawal Rate
Your withdrawal rate is the percentage of retirement savings that must be taken each year to meet annual expenses after accounting for income from sources like Social Security. Having higher income will reduce the percentage that comes from your portfolio because it only needs to make up the remaining shortfall.
To show how this rate is calculated, let’s assume that you are a couple expecting to get $3,800 a month in Social Security combined ($45,600 annually). As a reference, the average Social Security retirement benefit for one person was $2,071 per month as of January 2026, so a combined benefit of $3,800 runs somewhat below what two average earners would receive together. 1 That leaves your portfolio to cover $54,400 each year as part of a $100,000 spending goal.
| Category | Amount |
|---|---|
| Monthly Social Security (combined) | $3,800 |
| Annual Social Security | $45,600 |
| Annual spending goal | $100,000 |
| Amount needed from savings | $54,400 |
A $54,400 withdrawal from a $1.5 million portfolio works out to an initial withdrawal rate of about 3.6%.
| Calculation | Amount |
|---|---|
| Annual portfolio withdrawal | $54,400 |
| Total retirement savings | $1,500,000 |
| Implied withdrawal rate | $54,400 ÷ $1,500,000 = 3.63% |
By itself, that rate may appear manageable for a retirement that could last 30 years. But it assumes you only need to withdraw $54,400, before taxes enter the picture.
A financial advisor can help you estimate how much your portfolio needs to generate after Social Security and taxes.
Second, Account for the Tax Bill on That Money
Taxes can push your actual withdrawal higher than the baseline figure. If much of your $1.5 million is held in traditional IRAs or 401(k)s, distributions would generally be taxed as ordinary income. Your Social Security benefits may also be partially taxable, depending on other income.
Your account mix matters here too. Withdrawals from a taxable brokerage account, a traditional IRA and a Roth IRA can carry very different tax consequences, so the same $69,400 withdrawal could result in a noticeably different tax bill depending on which accounts it comes from.
As an example, assume that you and your spouse owe $15,000 in combined federal and state taxes after taking money from your portfolio. The estimate reflects your tax bracket and how much of your Social Security benefits are taxable. To maintain the same $54,400 in after-tax income, you would now have to take $69,400 from your portfolio.
| Category | Amount |
|---|---|
| After-tax spending need | $54,400 |
| Estimated tax owed on withdrawal | $15,000 |
| Total portfolio withdrawal needed | $69,400 |
| Total retirement savings | $1,500,000 |
| Effective withdrawal rate | $69,400 ÷ $1,500,000 = 4.63% |
Required minimum distributions (RMDs) can add another wrinkle. At ages 66 and 64, both of you are likely born in 1960 or later, which under current law generally sets your RMD age at 75. Once mandatory withdrawals begin, they can increase taxable income even in years when the money isn’t actually needed for spending.
Third, Adjust Your Target Spending for Inflation
Inflation reduces what your money can buy over time unless your income keeps pace with it. To show how rising prices may undercut the purchasing power of your portfolio, the table below breaks down an example with SmartAsset’s inflation calculator. Assuming a 2.5% average annual rate, you will see that a $100,000 lifestyle could cost more the longer retirement lasts.
| Year | Annual Spending Needed to Match Today’s $100,000 |
|---|---|
| Today | $100,000 |
| Year 10 | $128,008 |
| Year 20 | $163,861 |
| Year 30 | $209,756 |
This doesn’t mean that every increase has to come from your portfolio. Social Security cost-of-living adjustments could help offset inflation. Even so, withdrawals often need to increase over time, particularly if healthcare, housing or long-term care costs go up faster than inflation.
Put your required withdrawal rate, taxes and inflation together, and a $1.5 million nest egg that looked comfortable at first may turn out to be a much tighter fit than the balance alone suggested. A financial advisor can help you run these numbers against your actual accounts to see where your nest egg could stand.
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