After forty years in this business, the question I hear most from business owners nearing retirement is simple: How much do I need?
The honest answer is that the number is different for everyone. Any advisor who gives you a one-size-fits-all figure without understanding your specific situation is doing you a disservice. Still, there is a framework for thinking through this question that can give you something useful to work with.
Why the Generic Retirement Numbers Do Not Apply to You
Every year, surveys report an average target for retirement savings. According to Northwestern Mutual’s 2026 Planning and Progress Study, Americans say they need $1.46 million to retire comfortably in 2026. The same study found that high-net-worth individuals, those with more than $1 million in investable assets, say they expect to need closer to $2.67 million on average.
Those numbers may be useful context for a general audience, but they do not describe your situation. A business owner who has spent three decades building a company and accumulating real estate, while holding concentrated stock positions and running income through a complex tax structure, has a retirement picture that looks nothing like that of the person who saved in a 401(k) through a single employer.
Your retirement number depends on your lifestyle costs, income sources, tax impact, and how long your funds must last. Calculating this correctly is the key to effective planning.
Start With Income, Not Assets
A common mistake is focusing only on total assets rather than on the income those assets generate. Assets matter, but income is what supports your lifestyle.
A useful starting point is to identify your monthly expenses in retirement and work backward from there. What does your lifestyle actually cost? Healthcare, housing, travel, family support, charitable giving, and taxes all factor into that number. Several of these are often underestimated.
Healthcare alone deserves serious attention. Many business owners retire before Medicare eligibility at 65, which means several years of covering those costs out of pocket. The gap between what people budget for healthcare and what it actually costs in retirement is one of the more consistent planning blind spots I see in practice. Once you have a realistic income target, map your income sources. For business owners, these may include investment distributions, Social Security benefits, rental income, proceeds from a business sale, deferred compensation, and possibly continued business involvement in a reduced role. Each source has different tax rules, timings, and levels of certainty.
The Business Sale Creates a Unique Set of Challenges
For many business owners, the sale of the business represents the largest single financial event of their lives. It is also one of the most common places where retirement planning breaks down.
It’s important to clarify that business value is not the same as the proceeds you receive from a sale. Taxes, deal structure, earnouts, and transition requirements can all impact the actual amount you take home. Relying on the full sale price as liquid, investable capital when planning for retirement often leads to surprises.
The time to consider the retirement implications of a business sale is before the sale happens. This means understanding tax exposure, deciding how to invest proceeds, and determining whether your post-sale income actually supports your desired lifestyle. We’ve covered how some pre-retirement transition decisions play out in an earlier post. It may be worth reading along with this one.
Taxes Are Part of the Calculation, Not an Afterthought
Business owners who have accumulated wealth in tax-deferred accounts, real estate, or business interests are sitting on assets that carry embedded tax liabilities. When you start drawing on those assets in retirement, the tax treatment affects how much income you actually receive from each dollar withdrawn.
The order in which you draw from different accounts, which accounts you use for which expenses, and how you time Social Security can all affect your overall tax picture. This is not a set-it-and-forget-it calculation. Ongoing attention is needed as tax laws change and income sources evolve. Consulting a qualified tax professional alongside your advisor is crucial to building a plan that holds up.
How to Think About Your Number
There is a straightforward retirement planning framework for high-net-worth individuals. Estimate your annual spending needs, including inflation and healthcare. Identify all sources of income and their after-tax value. Calculate the gap between your income sources and the lifestyle you require. That gap is what your portfolio must cover.
A commonly referenced guideline suggests that a portfolio may support annual withdrawals of around 3.5% to 4% over a long retirement horizon, though that figure depends on your specific asset allocation, time horizon, and market conditions. Individual results can vary considerably, and there is no guarantee any withdrawal rate will sustain a portfolio for any specific period.
Business owners with $3.5 million or more in investable assets generally have more flexibility than the average retiree. The main risk is not having too little. It’s building a plan that is careless with taxes, sequence of returns, and income coordination. Discovering a gap late is a bigger concern than falling short on assets.
If you would like to work through what that calculation looks like for your specific situation, we are glad to have that conversation. Reach out when you are ready.
TL:DR There is no universal retirement number for business owners. The calculation depends on lifestyle costs, income sources, tax structure, and how your business sale proceeds are handled. High-net-worth individuals need to focus on income planning, not just asset targets. Taxes are central to that analysis throughout retirement. Getting the framework right early is easier than correcting it later.
