08/20/2026
How Much Do You Really Need in Retirement? (And Why the Answer Isn't Just a Number)
Ask ten people how much they need to retire, and you'll get ten different numbers — usually pulled from a rule of thumb they read once and never revisited. $1 million. 80% of your final salary. 25 times your annual expenses.
Here's the problem: none of those numbers tell you what actually matters, which is whether your money will keep showing up every month for the rest of your life, regardless of what the market is doing.
That's not a savings question. It's an income design question. And it's why two very different financial tools — MYGAs and dividend-paying investments — both deserve a seat at the table when you're planning retirement income.
**Start With Expenses, Not a Magic Number**
Before you can know "how much," you need to know "how much for what." Break your retirement spending into two buckets:
- Essential expenses: housing, healthcare, food, utilities, insurance — the bills that show up whether the market is up or down
- Discretionary expenses: travel, hobbies, gifts, the things that make retirement enjoyable but can flex if needed
This distinction matters more than any single savings target, because it tells you what kind of income you actually need to build. Essential expenses need reliable, predictable income. Discretionary expenses can tolerate more variability — because if a bad market year means you take one less vacation, that's an inconvenience, not a crisis.
**Where MYGAs Fit In**
A Multi-Year Guaranteed Annuity (MYGA) is about as close as you get to a bond with training wheels. You deposit a lump sum with an insurance company, they credit you a fixed interest rate for a set period — often three, five, or seven years — and your principal and growth are contractually guaranteed for that term, regardless of what's happening in the stock market.
That predictability is the entire point. A MYGA isn't designed to make you rich; it's designed to make a portion of your retirement income boring — in the best possible way. When you know your essential expenses are covered by a stream of guaranteed, contractually locked-in income, market volatility stops being a threat to your lifestyle and starts being background noise.
A few things worth knowing before using one:
- Your money is generally illiquid during the guarantee period — early withdrawals typically trigger surrender charges
- Growth is tax-deferred, not tax-free — you'll owe ordinary income tax on the gains when you withdraw
- Guarantees are backed by the claims-paying ability of the issuing insurance company, not by FDIC insurance, so insurer selection matters
Used well, a MYGA (or a ladder of several, with staggered maturity dates) can function as the "floor" of a retirement income plan — the part of your portfolio you don't have to think about.
**Where Dividends Fit In**
Dividend-paying stocks and funds solve a different problem: the fact that a fixed dollar amount today buys less a decade from now. Inflation is quiet, but it's relentless, and a retirement income plan built entirely on fixed, unchanging payments can lose real purchasing power over a 20- or 30-year retirement.
Companies with a history of consistent, growing dividends — think decades of annual increases — give you something a MYGA structurally can't: income that has the potential to rise over time, along with ownership in businesses that can grow. That upside comes with real tradeoffs, though. Dividend payments aren't guaranteed; companies can cut them in hard times, and the underlying share price will still move with the market. This bucket is doing a different job than your MYGA — it's playing offense, not defense.
**Why the Combination Matters More Than Either Alone**
This is the part that gets lost in most retirement conversations, because most conversations frame it as a choice: guaranteed income versus market growth, safety versus opportunity. In practice, a well-built retirement plan usually isn't choosing one — it's sequencing both, deliberately, against your actual expenses.
Picture it this way:
- MYGAs (and other guaranteed vehicles) cover your essential expenses — the non-negotiables — so a down market year never forces you to sell growth assets at a loss just to pay the electric bill
- Dividend-paying investments cover your discretionary spending and provide the long-term growth that keeps pace with inflation over a retirement that could easily last 25-plus years
That combination does something psychological, too, not just mathematical: it lets you actually stay invested for growth, because you're not relying on that growth to pay this month's bills. Some of the worst retirement outcomes happen not because someone's portfolio was badly built, but because a bad market year forced them to sell growth assets at exactly the wrong time to cover expenses. A guaranteed income floor removes that pressure entirely.
**So, How Much Do You Actually Need?**
Less a single number, more a formula:
1. Add up your essential annual expenses
2. Determine how much guaranteed income (Social Security, pension, MYGA ladder, etc.) covers that number
3. Size your growth-oriented investments — including dividend payers — to cover discretionary spending and outpace inflation over your expected retirement timeline
4. Revisit the mix every few years, because your expenses, health, and the market will all change
That's a retirement income plan. A single lump-sum number, on its own, isn't.
**The Bottom Line**
The question "how much do I need to retire" is really two questions: how much do I need to feel secure, and how much do I need to keep pace with the decades ahead. MYGAs answer the first. Dividend-paying investments help answer the second. Neither one alone tells the whole story — but together, they can.
If you're building out your own retirement income strategy and want to talk through how a guaranteed-income floor and a growth-oriented dividend strategy could work together for your specific situation, I'd welcome the conversation.
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*This article is for general educational purposes and isn't personalized financial, investment, or tax advice. MYGA guarantees are backed by the issuing insurance company, not FDIC insurance. Dividend payments are not guaranteed and can be reduced or eliminated. Please contact me at 817-540-1022 for any questions you may have
