Setting Realistic Retirement Goals: How to Recalculate Needs Based on Market Performance

Performance

Let’s talk about what it really means to set realistic retirement goals. We all want financial security and peace of mind, but too often, we get caught up in saving without taking the time to picture what our ideal retirement could look like. As we’ve seen in 2025, the markets don’t always cooperate. The following information is for general educational purposes only and is not intended as investment advice. Individual needs vary, and you should consult a qualified financial professional or review your own circumstances before making investment or retirement decisions. Now, let’s walk through how you can set meaningful, achievable retirement goals—and, just as importantly, how to adjust those goals as the market changes.

Defining Realistic Retirement Goals

First, get specific about what you want your retirement to look like. Picture yourself: What will you do with your days? Where do you want to live? Will you travel, volunteer, or maybe even start a small business? It’s important to jot down your goals—whether that means buying a second home, exploring new hobbies, or simply enjoying your current lifestyle. The clearer you are about your vision, the easier it is to build a plan that truly fits you.

Next, take an honest look at your current financial situation. Write down your current income, your monthly expenses, and your savings so far. This gives you a starting point—a baseline for what you can reasonably save each month. While a common rule of thumb is to save 10–15% of your annual income, remember: the right number for you depends on your age, your goals, and your unique situation.

Now, estimate what your yearly expenses might be once you retire. Some costs—like your mortgage or childcare—may go down, while others, like travel or healthcare, might go up. Multiply your expected annual expenses by the number of years you hope to spend in retirement—usually 25 to 30 years—to get a rough savings target.

And don’t forget to make your retirement goals SMART: Specific, Measurable, Achievable, Results-focused, and Time-sensitive. This helps turn big dreams into concrete plans.

How to Recalculate Your Retirement Needs Based on Market Performance

Market fluctuations can significantly impact your retirement plan. If you’ve experienced some market turbulence or unexpected gains, now is the perfect time to revisit your goals and make sure your plan still makes sense.

1. Review Your Portfolio Performance:
   Begin by reviewing your most recent investment statements. Look at your average returns since your last check-in and see how they stack up against what you originally expected.
2. Adjust Future Return Assumptions:
   If the market hasn’t performed as well as you’d hoped, it may be prudent to lower your future return expectations—for example, some individuals use a conservative estimate of about 4%. On the other hand, if your returns have been strong, you might be ahead of schedule, which could provide more flexibility in your savings plan. These are general examples and not recommendations. Please consider your unique situation and, if needed, consult a licensed financial professional.
3. Update Your Retirement Calculator Inputs:
   Plug your updated balances and new return estimates into an online retirement calculator (there are great ones from Vanguard, Bankrate, Merrill, and Fidelity). These tools can quickly show you if you’re still on track—or if you might need to tweak your savings rate or retirement timeline.
4. Reassess Withdrawal Rate:
   Review your current balances and market conditions to determine an appropriate annual withdrawal rate. The classic “4% rule” is often referenced as a general guideline, but it may not be suitable for everyone. You might need to adjust it based on your personal situation and market performance. Consider seeking advice from a qualified financial professional before making withdrawal decisions.
5. Revise Goals and Contributions:
   If things aren’t quite going according to plan, you might want to think about delaying retirement, boosting your savings, or trimming your retirement budget a bit. But if you’re ahead of schedule thanks to strong market gains, maybe you can retire a little earlier or enjoy a few more luxuries during retirement.

SEC-Compliant Disclosure

This article is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security. It does not contain investment advice or an opinion regarding the appropriateness of any investment. Past performance is not indicative of future results. Investments are subject to market risk, including the loss of principal. Always consult with a qualified financial advisor before making financial decisions.

Sources

1. Mutual of Omaha: How to Set and Achieve Retirement Goals
   https://www.mutualofomaha.com/advice/retirement-planning/navigating-your-retirement/how-to-set-and-achieve-retirement-goals-for-the-future
2. Western & Southern: How to Set Retirement Goals
   https://www.westernsouthern.com/retirement/how-to-set-retirement-goals
3. NerdWallet: Retirement Planning – A 5-Step Guide for 2025
   https://www.nerdwallet.com/article/investing/retirement-planning-an-introduction
4. Fidelity: How much do I need to retire?
   https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire
5. Bankrate: 401(k) Retirement Savings Calculator
   https://www.bankrate.com/retirement/401-k-calculator/
6. Vanguard: Retirement Income Calculator
   https://investor.vanguard.com/tools-calculators/retirement-income-calculator
7. SmartAsset: Retirement Calculator
   https://smartasset.com/retirement/retirement-calculator
8. Investopedia: Want to Retire in 2025? Here Are 6 Things I'm Telling My Clients
   https://www.investopedia.com/fa-one-thing-retiring-in-2025-11723573
9. NerdWallet: Retirement Calculator
   https://www.nerdwallet.com/calculator/retirement-calculator

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