How Much Money Do You Really Need to Retire in South Carolina Midlands?

Is $1 Million Enough to Retire?

If you’re in your 50s and living here in the Midlands, you've likely realized that this area serves as a practical "launchpad" for retirement. Because the cost of living here is generally lower than in other parts of the state or the Southeast, it provides the financial flexibility to spend time in the mountains, head to the coast, or travel abroad without overextending your nest egg.

Columbia, SC Skyline

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When planning for that transition, the question isn’t about a generic "magic number." National experts often suggest $1 million or $2 million as a baseline, but those figures don't account for your specific spending goals or the tax realities of living in South Carolina. To find your number, we have to look at the actual cash flow required to support your lifestyle.

1. Determining Your "Income Gap"

The most critical number in your plan isn't your total net worth; it’s your Income Gap. This is the difference between your projected annual expenses and your "guaranteed" income sources, such as Social Security or a pension.

For example, if you aim for a lifestyle that costs $100,000 a year—covering everything from housing and groceries to travel—and your Social Security provides $50,000, your "Income Gap" is $50,000. This is the amount your personal savings must provide.

2. Beyond the Rules of Thumb

You may have heard of the "4% Rule," which suggests you can safely withdraw 4% of your savings annually. While this is a common starting point for a conversation, it is often too rigid for a real-world retirement plan.

In a professional plan, we look at Dynamic Guardrails. This approach allows your spending to adjust based on market performance and your changing needs as you age. Your "number" isn't a static target; it’s a living model that must account for inflation, market volatility, and the fact that your spending in your 60s will likely look very different from your spending in your 80s.

3. The South Carolina Tax Reality

It is common to hear that South Carolina is a "low-tax" state for retirees. To be a straight shooter: we currently rank 29th overall for tax burden. While it is true that we do not tax Social Security benefits, we have to account for rising local costs and property tax reassessments that have impacted many homeowners in Richland and Lexington counties.

However, recent legislative changes, specifically the H. 4216 law, have moved our top state income tax rate down to 5.21% for the 2026 tax year. While we aren't the lowest in the country, this lower rate helps your retirement withdrawals go a bit further than they would in more expensive regions of the state.

Next Steps for Your Retirement

Ready to take the next step? I’d love to help you build a retirement plan, investment plan, and tax strategy.

Visit us at CapitalWealthGroupSC.com to see how we work with the 50-to-60 crowd. If you’re ready to dive into your numbers, you can schedule a 30-minute Introductory Call right here.

Let’s make sure you're on the right track for the retirement you want.

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Full Podcast Transcript (Click to Expand)

How Much Money Do You Need To Retire?

Welcome to the "Retire with Confidence" Podcast! I'm your host, George Jameson owner of Capital Wealth Group, a Flat Fee Only Advisory firm. Whether you’re nearing retirement or already retired, Join me each week as we explore the world of retirement planning and equip you with the knowledge and tools you need for a successful retirement. So let’s get started! In today’s episode, we will be exploring the age-old question, “How much money do you need to retire? As a Financial Advisor,  this is the most commonly asked question I get from those age 50 and above. 

There are many Financial experts who have offered various rules of thumb regarding how much you need to retire. Some say you need anywhere between 70% to 90% of your pre-retirement income in retirement. Then you have others suggest saving 10 to 12 times your pre-retirement salary for a comfortable retirement. Buy what’s right for you? 

 Because there are so many variables, there really isn’t a one-size-fits-all solution or rule of thumb when it comes to estimating the amount needed to retire. The amount you need will vary depending on several factors. 

Today, I will provide a straightforward framework to help you determine how much money you will need. This will give you a much more precise estimate than any rule of thumb. 

The approach I use to answer this question, How much money do you need to retire? Involves answering three basic questions and comparing the results.   

The first one is: how long will your retirement last? To answer this, you'll need to estimate your life expectancy and decide at what age you plan to retire. Of course, we don’t know how long we will live, but we can come up with a reasonable estimate.  You can look at your family history as a good place to start. You can also use an online life expectancy calculator to get a better estimate. The one I really like is called livingto100.com and it’s totally free. There are other options online as well. 

 If you prefer to play it safe, I suggest using age 90 or 95. If you have family members who have lived well into their 90s, you may want to use age 100. Once you've decided on a life expectancy age, you simply subtract it from the age you plan to retire to determine how long your retirement will last. 

Moving on to the second question: what are your estimated expenses in retirement? 

To answer this, first figure out your current average monthly expenses.  If you don’t already keep track. Gather your past 12 months of credit cards and bank statements. Then make a list of expenses by category. I recommend using an Excel spreadsheet. If you need a budget template, you can download one of mine for free. You can also use budgeting software like mint.com, YNAB.com, Everydollar, among others. Once, you have all of your current expense organized, then figure out what to add, subtract or reduce to come with your estimated expenses in retirement. 

For example, if your house will be paid off at retirement, you will no longer have a mortgage payment, but you will still have homeowners insurance and property taxes. If you plan to downsize, you'll most likely have less maintenance and lower utility bills. You may add some expenses in retirement, like extra travel, hobbies, and so on. 

In retirement, you will have a lot more free time, so you'll need to determine what you want to do and what it costs. Do you have any hobbies or interests that cost money? What will you do for entertainment? Do you plan to travel? Are you going to work part-time for a few years or fully retire now? If you retire before age 65, do you need Health insurance? If so, what’s the cost until you're eligible for Medicare? Do you have long-term care insurance?  If not, you may want to set aside some money just in case? These are all important questions to consider when estimating your retirement expenses.

One thing you will not have to pay for in retirement, is FICA taxes. Currently, for W2 employees, FICA taxes are 7.65% on the first $160,000 of income. And if you are Self-employed, you currently pay 15.3% on the first $160,000 of income. 

FICA taxes are U.S. federal payroll taxes used to fund social security and medicare. FICA stands for the Federal Insurance Contributions Act and is deducted from each paycheck for W2 employees. Assuming you will be fully retired and your income isn’t from wages or a business you will not have to pay FICA or Self-Employed taxes.  

However, you will still pay federal taxes on most retirement income including IRA withdrawals, Pension income, and up to 85% of your Social Security income. Most States don’t tax SS. In fact, Only 11 states may tax your social security income. Then there are 13 States that don’t tax any of your retirement income including IRA withdrawals. I will go into more detail regarding taxes in retirement on future episodes.

The last question we need to solve for.  What is your projected Income in Retirement? There are three types of income you need to calculate. 

The first is guaranteed income, which includes Social Security, Pensions, and income annuities. 

The second type is called “other income”. It includes income from rental properties, royalties, a side business, or a part-time job. After retiring from a full-time job, some retirees opt to work part-time for a few years, either doing consulting or free-lance work etc. This can be a good way to ease yourself into full retirement. 

The third type of income is the income you can produce from your savings and investments. This question can be a bit tricky. There’s a lot of research out there on “Safe withdrawal rates”, but many of them assume you are going to be spending a steady amount overtime while adjusting for inflation. This may work well for those starting Social Security the day they retire. However, it can be a little more complicated if you retire and delay Social Security. You may have to take a higher rate from your investments until SS kicks in. And then when SS kicks in, your taxes change and so on.  

Don’t get overwhelmed if this is you. Realize that taking more than a 3 to 4% rate of withdrawal from your investments for a several years before starting SS is okay. And don’t let it get in the way of making the right decision for you when it comes to deciding when to start SSI.  This is where financial planning software can really help you see the big picture and help you make the right decisions. 

Today, we will focus on 1 withdrawal strategy: the 4% Rule. It states that you can withdrawal 4% the first year of retirement, increasing it each year for inflation. This assumes a 50/50 stock to bond portfolio and a 30-year retirement.   

If you have a more conservative portfolio or your retirement will last more than 30 years, you may need a smaller withdrawal rate or use a different withdrawal strategy. In my next episode, we will cover the 4% rule and alternative withdrawal strategies in more detail.

Once you have calculated all of your estimated income for retirement from all 3 sources, simply compare it to your estimated expenses to see if you have enough to retire. 

Let's look at an example to put everything together. Suppose you need $100k in retirement income based on your estimated retirement expenses. You are married, both of you are age 63, and would like to retire at age 65. Just to keep it simple, you both will start Social Security at age 65. You have no pension or "other income" you will get a combined $50k from Social Security after tax, leaving a $50k income gap which you will need to generate from your investments. Based on the 4% rule, you would need about $1.25M assuming you have a 50/50 portfolio. 

There are three important things to note in this example. First, taxes on withdrawals weren't considered. Second, if your retirement lasts longer than 30 years or your portfolio is more conservative than 50% stocks and 50% bonds, you may not want to use the 4% rule. Finally, Both spouses taking Social Security at age 65 may or may not be your best option. Some retirees may benefit from delaying Social Security until age 70 to take advantage of the 8% per year increase in guaranteed income. 

IN addition, One big risk you face near the beginning of retirement using a total return withdrawal strategy like the 4% rule is the sequence of return risk. Which is the risk your portfolio will have negative returns near the beginning of retirement as you start taking withdrawals.  

You may want to take steps to help reduce this risk.  Here are several ways to go about  it.  First, you can simply start out with a lower withdrawal rate than the 4% if you have enough saved or can live on less, Second, use the 4% rule but be a little more flexible in your withdrawal rate after year 1, if the markets take a downturn. Third, for those who prefer safety first, you can cover your basic living expenses with guaranteed or predictable sources of income including Social Security, pensions, other income, and income annuities. However, if your guaranteed income doesn’t cover all of your essential expenses and you don’t like income annuities, I suggest setting aside 1,2,3 or even-5 years of your essential expenses to cover the gap in safe liquid assets such as short-term government bonds, CD’s, MM’s, etc. This can be a part of your bond allocation or you can set aside one or two years in addition to your 60/40 or 50/50 allocation or whatever allocation is appropriate for you. 

There is not one correct strategy and historically speaking you may be just fine following the 4% rule as it is. But the previous strategies can help reduce your sequence of return risk and help you sleep better at night. 

A quick disclosure about annuities. They tend to be a polarizing topic, some people hate them, others love them, and many do not understand them. As a fee-only advisor, I do not sell annuities; however, for the right person and the right reasons, an income annuity may make sense as a part of someone's overall retirement plan. In upcoming episodes, we will discuss annuities in much more detail.  

To summarize, In this episode I provided guidance on how to calculate the estimated amount of money you’ll need to retire. Here’s a recap. First, figure out how long your retirement will last by subtracting your retirement age from your life expectancy. 

Second, estimate your retirement expenses, allowing for unexpected costs like long-term care, healthcare costs, home repairs and so on. 

Third, calculate your cash flow in retirement by looking at guaranteed income sources like Social Security, pensions, and income annuities, and other income like rental income or part-time work. 

Lastly, estimate how much income you can safely generate from your investments and savings. 

And Finally, add up your total estimated annual income in retirement and compare it to your estimated annual expenses in retirement to see if you have enough to retire. Remember to plan for a cushion for unexpected costs and other surprises that life may bring.  

Thank you for tuning in to this episode of Retire with Confidence. I hope you found the information helpful in your retirement planning journey. If you enjoyed this episode, please subscribe to my podcast and leave a 5 star review to help others discover the show.

If you have any questions, topic ideas, or want to discuss your retirement plan, feel free to reach out to me, George Jameson, with Capital Wealth Group. You can visit our website at capitalwealthplan.com to learn more.

Thank you again for listening, and I look forward to bringing you more valuable insights on retirement planning in future episodes.

 Thank you for tuning in to this episode of Retire with Confidence. I hope you found the information helpful in your retirement planning journey. If you enjoyed this episode, please subscribe to my podcast and leave a 5 star review to help others discover the show.

If you have any questions, topic ideas, or want to discuss your retirement plan, feel free to reach out to me, George Jameson, with Capital Wealth Group. You can visit our website at capitalwealthplan.com to learn more.

Thank you again for listening, and I look forward to bringing you more valuable insights on retirement planning in future episodes.

Diclaimer

The information discussed in this podcast is for general explanations and education only. It is not tax, legal, or investment advice. Before considering acting on any information heard here, first consult with your tax, legal, or investment advisor. Thank you and have a great day.