After nearly thirty years in the business of retirement income planning, I’ve learned something that surprises people when they hear it plainly: There are only three possible retirement outcomes.
Not three hundred. Not one for every market forecast or economic regime. Not one for each new financial product or political headline. Just three.
Every retirement outcome—good, bad, or spectacular—is a function of the same three variables:
- How much you save during your working years
- How much equity risk you take, both before and after retirement
- How much you withdraw once you stop earning a paycheck
Everything else is commentary.
Taxes matter, yes. So does inflation. So does sequence of returns risk. But those forces don’t create outcomes on their own. They amplify the decisions we make around these three variables. They reveal both the wisdom and the fragility of the plans we’ve built.
I didn’t always see it this way.
When I started in the industry in the mid-90s, I thought retirement success came from cleverness. From picking the right funds. From staying one step ahead of the market. From knowing something others didn’t. That belief was reinforced daily by sales leaderboards, quarterly rankings, and an industry culture obsessed with performance.
It took years—and more than a few painful lessons—for me to see that retirement outcomes aren’t driven by brilliance. They’re driven by behavior. Repeated, boring, disciplined behavior over decades.
And those behaviors inevitably land us in one of three places.
Outcome One: Running Out of Money Before You Run Out of Life
This is the failed retirement outcome. It’s also the most common among the unprepared.
In this scenario, a retiree’s inflation-adjusted spending consistently exceeds their portfolio’s return. At first, the gap is small. Maybe the withdrawals seem reasonable. Maybe markets cooperate for a while. But slowly—almost invisibly at first—the retiree begins dipping into principal.
Then the dips get larger.
Then the portfolio starts shrinking.
And eventually, the income-producing assets are gone while life keeps going and expenses keep inflating.
This outcome is not usually caused by one catastrophic mistake. It’s caused by a pattern of small ones:
- Saving too little during the accumulation years because “there was always time later”
- Taking too little diversified equity risk without understanding the tradeoffs
- Taking too much concentrated risk (becoming enamored of an investment fad)
- Anchoring spending to lifestyle expectations instead of portfolio reality
- Ignoring inflation because it feels abstract—until it isn’t
I’ve seen this outcome play out in real time. It often arrives quietly, followed by anxiety, then fear, then (sadly) hard conversations with adult children. It’s emotionally devastating not because money is everything, but because running out of money feels like running out of options, dignity, and agency.
This is the retirement outcome we work hardest to help people avoid.
Outcome Two: Finding Balance—What I Call “Orbit”
The second outcome is where most successful retirements live.
Here, inflation-adjusted spending and long-term portfolio returns find an equilibrium. Withdrawals are sustainable. The portfolio fluctuates but generally holds its ground. Income supports expenses, and expenses respect income.
This is a good retirement.
It allows for travel, generosity, hobbies, and peace of mind. It works across most market environments if the retiree understands one critical truth: Markets don’t move in straight lines.
Orbit works best when it’s supported by thoughtful risk management—especially during the withdrawal years. That often means:
- Maintaining appropriate equity exposure without chasing returns or fleeing drawdowns
- Holding a meaningful cash buffer to weather those inevitable market drawdowns
- Accepting that some years require restraint and flexibility
Without that cushion, even a well-balanced retirement can fail under extreme conditions. A severe bear market early in retirement, combined with rigid spending, can knock an otherwise sound plan out of orbit.
Orbit isn’t about perfection. It’s about adaptability.
And when retirees understand that—when they stop expecting markets to behave politely—this outcome can support a long, meaningful life.
Outcome Three: Escape Velocity
The third outcome is rare, but it’s beautiful.
This is where a retiree’s average portfolio returns consistently exceed their inflation-adjusted spending, even after withdrawals. The unused returns are reinvested. The portfolio grows. Future returns accelerate.
Eventually, the portfolio reaches escape velocity.
At that point, it no longer matters what the market does in any given year. The portfolio may fluctuate, but income from the portfolio no longer meaningfully declines. Income needs are met easily. Inflation is absorbed. Volatility becomes background noise.
This is not about greed. It’s about margin.
People who reach this outcome often share a few characteristics:
- High savings rates during their working years
- Consistent equity exposure aligned with long-term goals
- High EQ, or mindfulness, or tenacity, or discipline, or resilience, or fortitude, or optimism—as opposed to fear
- Withdrawal rates that are conservative relative to portfolio size
- A mindset oriented toward sufficiency rather than maximum consumption
Escape velocity creates options.
It creates the ability to help family without jeopardizing one’s own security. It creates room for generosity, philanthropy, and legacy. It allows retirees to support causes they care about and leave behind assets that outpace inflation, not just survive it.
This is where money becomes a tool for meaning rather than a source of worry.
There can be NO certainty. This is about clear decision making without knowing what comes next.
The market will do what it does. Inflation will rise and fall. Headlines will scream. There will be varying levels of chaos. But your retirement outcome will still land in one of these three buckets—based on the behaviors you choose around saving-rate, equity exposure, and withdrawal-rate.
In the next three articles, I’ll walk through each outcome in detail. We’ll look at how people end up there, how to recognize early warning signs, and how to course-correct when possible.
Because the goal isn’t prediction.
The goal is to build a retirement that works even when life doesn’t go according to plan.
And it starts by understanding the only three outcomes that exist.
