A 55-year-old with $620,000 saved and $68,000 annual income faces key decisions on retirement planning. Two strategies dominate: targeting a desired lifestyle or building a budget around existing retirement assets.

Using a balanced 401(k) approach with 8% returns and continued contributions, projections show a potential portfolio value of $1.69 million by age 67. Applying the 4% rule suggests $68,000 in annual withdrawals.

Fact: The 4% rule originates from the 1994 Trinity Study, which found that withdrawing 4% annually, adjusted for inflation, gave a 95% success rate for portfolio longevity over 30 years.

Adding estimated Social Security benefits of $30,900 per year, the retiree could expect around $115,900 in pre-tax income. Actual withdrawal strategy and tax treatment of accounts will heavily influence net spending power in retirement.