Planning
Plan. Invest. Thrive.
The nine numbers behind the plan.
Rules of thumb are exactly that — useful approximations, not promises. They're the back-of-the-envelope math we use to sanity-check the path. Every one of these has edge cases. Use them to ask better questions of your plan, not to replace it.
After-tax income, allocated
Half needs, a third wants, a fifth future you.
50% to needs (housing, food, transport, utilities, minimum debt payments). 30% to wants (everything that isn't strictly necessary). 20% to future you (saving, investing, debt above minimums).
$10K/month after tax means $5K to needs, $3K to wants, $2K to saving and investing. If needs are over 60%, the lifestyle is borrowing from retirement.
Your retirement target
Twenty-five times what you'll spend.
Take your expected annual spending in retirement (today's dollars) and multiply by 25. That's your "Number" — the portfolio size that supports a 4% withdrawal indefinitely.
Spending $120K/year in retirement (after Social Security covers some) → portfolio target ≈ $3M. Add 10–15% if retiring before 65; subtract some if you have a meaningful pension.
Sustainable spend rate
Four percent of starting portfolio, adjusted for inflation.
The Trinity Study's headline result: a 4% initial withdrawal, increased with inflation each year, has historically lasted 30+ years across nearly every starting environment. Use 3.5% if retiring at 55, 5% if retiring at 75.
$2M portfolio at 65 supports roughly $80K/year before tax, growing with inflation, with high probability of lasting 30 years.
How fast money doubles
Seventy-two divided by your return.
72 ÷ rate of return = years to double. At 7% real return, money doubles every ~10 years. At 10%, every ~7 years. The arithmetic of compound interest, in a single line.
$50K at age 30 at 7% real → $100K by 40, $200K by 50, $400K by 60, $800K by 70. The last double is bigger than the first three combined.
Equity exposure
Subtract your age from 110.
A loose default for the stock allocation in retirement-stage portfolios. Age 40 → ~70% stocks. Age 65 → ~45% stocks. We adjust up for long horizons and down for capacity-to-bear-loss reasons; the rule is a starting point, not an ending one.
Most clients in their 50s land 50–70% stocks. Beyond a certain point, more stocks doesn't help — but less can cost real spending power.
Emergency fund
Three to six months of expenses, in cash.
Three months if you're a two-income household with stable jobs. Six months if you're single-income, self-employed, or in a volatile industry. Keep it in a high-yield savings account or money market — not in stocks, not in I-bonds, not in your checking account.
Spend $6K/month → $18K–$36K in the emergency fund. We hold this before we get aggressive with anything else.
Of gross income, saved
Fifteen percent of gross — every year, no excuses.
15% of gross income into retirement savings across all accounts and any employer match — that's the rate that has historically gotten people to a comfortable retirement starting in their late 20s. Started later? Push to 20–25%. Started earlier? You can probably ease back.
$200K salary → $30K/year into 401(k), IRA, HSA, taxable brokerage. Employer match counts.
Mortgage rule
Twenty-eight on housing, thirty-six on all debt.
No more than 28% of gross income on housing (PITI — principal, interest, taxes, insurance). No more than 36% on all debt combined. Lenders will let you go higher; we wouldn't.
$200K gross income → housing payment cap ~$4,700/month. That's the boundary between "stretched but fine" and "house-poor."
Annual upkeep
One percent of home value — every year, on average.
Plan to spend roughly 1% of your home's value per year on maintenance and repairs. Some years it's zero. Then a year shows up with a roof, an HVAC, and a foundation issue. Average it.
$600K home → $6K/year, $500/month set aside. This is what makes "the house is an investment" a complicated claim.
A note from MPM
Rules of thumb are training wheels. They get you most of the way there fast.
The plan we build with you is the bike. When the two disagree, the plan wins — but the rules will tell you which questions are worth asking.
MPM Wealth Advisors · Plan. Invest. Thrive.
mpmwealth.com · Updated May 2026
Sources: Cooley, Hubbard & Walz, “Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable” (Trinity Study, 1998) and subsequent updates; Vanguard Research, “Fuel for the F.I.R.E.” on safe withdrawal rates; Wade Pfau, Retirement Researcher; Fannie Mae for 28/36 housing-debt guidelines. Rule of 72 attributed to Luca Pacioli (1494). Rules of thumb are starting points and assume long-term historical averages that may not repeat.