Declare Your Financial Independence!

In this episode of Motley Fool Hidden Gems Investing, Motley Fool retirement expert Robert Brokamp and Motley Fool employee Stephanie Marini discuss how to find the answers to questions such as:

• How do you know if your retirement plan is on track?
• Common rules of thumb like the 50-30-20 rule and ye olde 4% rule (and why it should be 5%).
• Age-based retirement savings benchmarks from financial-services firms.
• Free and premium calculators.
• Getting a professional second opinion from an experienced financial planner who charges by the hour or project — and where to find such a planner.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

A full transcript is below.

This podcast was recorded on July 4, 2026.

Robert Brokamp: It's July 4th, the day America celebrates the adoption of the Declaration of Independence and the official birthday of our nation. Nothing more American than financial independence. After all, retirement is the money-related goal shared by just about everyone. We thought it fitting that in this installment of our 2026 Financial Planning Challenge, airing on America's Independence Day, that we focus on retirement. How do you know if your retirement plan is on track? And how will you know that you're financially ready to bid adieu to the working world? Here to discuss how to find the answers to those questions? Is my Foolish colleague certified financial planner Stephanie Marini. Welcome back to the show, Stephanie.

Stephanie Marini: Thanks for having me. I'm excited about this one.

Robert Brokamp: We're going to go through various ways of assessing your retirement progress from very general guidelines to more customized assessments. First, start off with the general stuff and talk about common retirement planning rules of thumb, and there are a bunch out there, and I would say most have at least some basis in good financial planning principles. Stephanie, what's a rule of thumb that you'd like to highlight?

Stephanie Marine: My favorite is always the 50/30/20 rule, so for those who don't know, 50% of income would be allocated for needs, 30% for wants, and 20% for savings. I like this one because for 80% to be going toward needs and wants feels like a really manageable percentage for most people, and also, it's a set-it-and-forget-it type of thing. If you can get within these guidelines, then checking it periodically makes it a little bit easier, and then also percentages are an easy way to tackle lifestyle creep or lifestyle inflation. As your income increases, the savings amount should be going up by a percentage relative to your income going up, so it helps combat that, too.

Robert Brokamp: When it drawbacks to this rule of thumb that you feel, maybe a little misleading for some people?

Stephanie Marini: Definitely, like a lot of these financial planning principles, it's general, so you have to apply it to your specific circumstance; 50% does seem like a lot, but for those people living in Sacramento, New York, of those high-cost-of-living areas, 50% might not be enough when rent is so high, so adjustments are needed. Also, once you factor in goals, someone who wants to retire and support extended family might need more than that 20% savings. It just depends. It's general, but there are some downsides to it.

Robert Brokamp: Every summer, I teach a class to our interns at The Motley Fool, and in the past, I've done it along with Buck Hartzell, a colleague who recently retired. I've used this rule of thumb every time, and then Buck always follows with 20% isn't enough. You should save until it hurts. There's always good to throw out there. If you could save more, that's better, and Buck just retired, so it worked for him. I'll touch on a related rule of thumb, this rule of thumb is 20% for savings, but that's savings for everything, when it comes to retirement, another rule is that 15% should be saved for retirement and that would include your match. So if you get a 5% match from your employer, you just have to put in the 10% to get the 15%. I think it's a good starting point, assumes you are starting to retire or save for retirement at some point, maybe in your 20s, maybe early 30s, so if you're getting a late start on saving for retirement, maybe has to be a little bit more than that, if you want to retire in your mid-60s. Then I feel like when it comes to rule thumbs, we have to, of course, touch on the old 4% rule. We've talked about it a lot on this show in the past. I started in 1994 with a report from Bill Bengen. He has since come out with a book saying, 4.7% is really the worst-case scenario. If he were retiring today, he would choose 5.5%. There's other reports that have found that 4% is probably too low. I'm just going to highlight one that just recently came out by David Blanchett of PGIM.

It's entitled rethinking safe initial withdrawal rates, and I thought this was interesting because he decided that you could provide guidance on safe withdrawal rates based on how much of your portfolio needs to cover essential expenses. He found that if you need to cover all your essential expenses with a portfolio for 30-year retirement, safe withdrawal rate should be 4.4%, maybe a moderate amount would be 4.9%, or if you have a lot of flexibility in your portfolio, 5.6%, so I'm just highlighting that. As again, there's a basic rule of thumb, but there's a lot of research about how to customize it. Me personally, I think 4% probably should start at 5% for most people, and then you can adjust for your circumstances. Let’s move on to some guidelines that get a little bit more customized, and these are age-based guidelines provided by many firms. In fact, most firms, I would say, have some guideline along these lines.

In most cases, they provide the guideline as a multiple of household income that you should have accumulated by a certain age, if you want to be on track to retire. Each firm's guidelines is going to be a little different because they use different assumptions. I'm just going to look at a couple of examples here. Probably the most well known come from Fidelity, so at age 30, they think you should have one time your income to save, so your household income is $75,000, you should have $75,000 saved in your 401(k)s and IRAs. At age 40, that multiple should be three, at age 56 the multiple should be six, at age 60, a multiple of eight, and at retirement, it should be a multiple of 10. Now, I'm going to give another opinion from T. Rowe Price. At age 30, they think you should have 0.5% times your household income; 40, two times; 50, five times; 60, nine times in the retirement 11 times. T. Rowe Price starts out a little lower at the beginning, maybe recognizing that when you just start your career, you might have school loans or something, you can't save as much, but then it ramps up later on. But another key point here is that T. Rowe Price assumes you're going to retire at age 65 or as Fidelity assumes a retirement at age of 67, so it's really important to dig into the assumptions behind these guidelines to see which ones are more applicable to your situation. With all that said, Stephanie, what do you think of these age-based guidelines?

Stephanie Marini: This one's hard for me. I can't say that I like age-based guidelines. Maybe for our younger audiences, it's OK. It's something to shoot for, when you're not in the nitty gritty of thinking about retirement in your 20s, it can make sense as a target. But as you get older, it doesn't take into account earnings years and the different earnings rates. Our younger audiences might be on the lower end, and as you get into your '40s and '50s, you should be on those higher end of earnings years, so it doesn't take that into account. Something else that I will say that I don't like become really popular in this click baby culture, social media culture is the dollar-based milestones by certain ages, so 150,000 saved by 30, it really doesn't take into account enough factors to be meaningful, and especially when you consider the wide range of incomes that there are out there. I would be really careful with these, as more than just a lighthouse target and very light milestone.

Robert Brokamp: I think that's true. You definitely have to dig into the assumptions behind them and make sure that they are applicable to you. In fact, I would say that some of the most value you can derive from these guidelines is reading the reports behind them, because they will contain some really good retirement planning nuggets that really don't express, and as you said, like, the headline of it and I'll just give an example from, like, T. Rowe Price’s report behind their guidelines. They actually provide a range of where you should be at each age, and that range should depend, as you said, on your income, and one principle here is that, the way Social Security is designed it replaces more income for lower income workers.

The takeaway there is the more you earn, the more you have to save because you're going to get less help from Social Security, and another principle they point out in their report is single folks have to save more because also they're only going to get one source of Social Security. There are some economies of scale that come from being married that you don't have when you're single, so you have to save more, so I strongly encourage you to read the reports, and I'll just highlight another one that I really like is JP Morgan's guide to retirement, which also has some guidelines in there about savings, but all kinds of interesting facts about retirement. I think if you read JP Morgan's guide to retirement, you're going to learn a thing or two about retirement plan.

Stephanie Marini: One example I would just add to that is, these milestones, they say income. But, for example, if someone has a goal of retiring on the early side, then the target at 55 is different than ones that are shooting out of 65, and then the other half of that is, if you are saving aggressively for retirement, then you might be saving 30, 40% of your income. Well, now that factors into what your retirement spending looks like, because if you're living off of 60% of your income, then you don't need as much because you're not living off that full income. I would just you really need to dig into the numbers behind some of these assumptions. Again, great light posts, high level, something to target and hoot for. But once you get closer and you're really trying to find those milestones and dig into the numbers, it has to go deeper than that.

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Robert Brokamp: We're going to move on to our next source of retirement assessment, and that is retirement calculators, because these allow you to put in your particulars, your actual savings rate, your retirement goal, what age you want to retire, what you're going to get from Social Security, and they can mix all those numbers together and give you an idea of whether you're on track. The last time you were on the show, Stephanie, which was the first installment of our June episode of the Financial Planning Challenge, we talked a lot about calculators, so we don't have to dig in these too much, but I will highlight the ones that we have highlighted in the past when it comes to retirement. My favorite free tool comes from CalcXML do an online search for CalcXML Retirement Planning Module. They have a few retirement calculators, but the one that you will get when you look for retirement planning module is the one I like the most. Then there are premium ones that we offer to recommend such as Boldin, MaxiFi and ProjectionLab, and again, Motley Fool Ventures, the sister company, The Motley Fool has an investment in Boldin. Stephanie, what are your thoughts on retirement calculators?

Stephanie Marini: I think for a free version, I really think everyone should start with wherever their employer qualified plan is. The big ones, especially Vanguard, Schwab, Fidelity, they'll all have a projection model built into their software, so same login. They can use things that are already coming in, like your savings rate by contributions, how you're invested and can project out from there. If you're on track or not on track, that's an easy way for people to have access. I think I've been using personally a lot more the ProjectionLab site. I'm still on the free one. There are some ads, but it's pretty extensive, even on the free side. I'm still pretty far from retirement, so I like how easy it is to model the hypothetical scenarios. What happens if I retire five years earlier? What happens if I stop contributing and switch jobs and want to do the Barista fire, where I just earn a small income for my last five working years. It's really easy to make those adjustments and see quickly how it affects my overall plan and longevity, changing out life expectancy all very easy to use. That's my push is for the ProjectionLabs, I think, has been really, fun for me lately.

Robert Brokamp: I know a few colleagues who feel the same way about ProjectionLab. I have used Boldin more, which I like. I like MaxiFi as well. It was designed by Larry Kotlikoff, an economist and someone who thinks a lot about retirement planning. To me personally, the cost of these tools, they are often free versions and a premium version, as well, but the costs are not so prohibitive that you can't use more than one and get a second or third opinion. What are your downsides, Stephanie, when it comes to using retirement calculators?

Stephanie Marini: You mentioned it earlier for the age-based guidelines, but I'm going to mention it here because this is where I think these default assumptions can get real dangerous maybe because the planning is a bit more extensive with these tools. But I really think you need to look at the default assumptions that are built in. I know them S&P, the market returns have been great over the last 10 years, but sometimes I think these softwares can use things that are a bit higher than I'd be comfortable with, something like 8-10% of annual returns. Back in June, we talked about it being a bit lower, so things like that, things like I inflation included? How does that affect it? What is the inflation rate for medical expenses, for example, which have historically been higher than traditional inflation. I really think you need to dig deep into the assumptions based in these tools before we just rely blanket on them.

Robert Brokamp: We talked about when you were on the show last that we both coincidentally use 6% as our return before retirement and 5% in retirement, and that is lower than a long term average stock market if you're investing mostly in stocks. But the truth of the matter is by just about any measure, the U.S. stock market is about as expensive as it's ever been, either as expensive as it's ever been or close to maybe the dot-com days and history says that when you started at a point of a significantly above average valuation, you tend to have below average returns over the next decade or so. Not always, but when it comes to retirement planning, you should play it safe with your projection. I think it makes sense to definitely look into what are the assumptions within your retirement calculator, and a good retirement calculator will first of all, explain those assumptions and allow you to customize them as well.

Finally, we move on to getting professional help with analyzing your retirement plan. I often say that I think even dedicated do it yourself should get an objective, professional second opinion once every 5-10 years or so, and it certainly right before retiring. You want to make sure you have all your ducks in a row. Stephanie, like me, you are a former financial planner, so what's your take on getting help from a human with your retirement plan?

Stephanie Marini: I think the biggest advantage to working with a financial professional, and again, exactly to your point, every few years is the mindset of financial planning. On the high level, financial planning is all numbers and calculators and a bit more black and white, but there's so much more that goes into it from just thinking about what retirement looks like. What does that really cost? Having confidence in your allocation, even when the market is down 30%. Then the long-term tax strategy. I like that you mentioned, it's not just right before you retire, but even maybe five years before you retire to make sure your accounts are in the right places for tax strategy in retirement. I think the mindset that a financial professional can help walk you through those more qualitative questions and emotional journey that comes with these big financial decisions is not something that AI or calculators have been able to replace. I think it's worth speaking to every few years.

Robert Brokamp: You mentioned the emotional journey, and I think that most financial planners will say the value that they really add is not the number crunching as much as the behavioral coaching, and in some cases, it's just plain old accountability. Because we all have things we know we could probably be doing better with our finances and we just haven't gotten around to it. A planner can help prioritize that and keep you on track, otherwise, I think it's just good to work with the planner because they have the experience. They've helped many other people get through this process of saving for and then entering retirement. Ideally have deep knowledge about all aspects of that, the taxes, as you mentioned, asset allocation, when to claim Social Security, Medicare, and they have sophisticated software that often isn't available to non professionals. T

he downside, of course, is it's going to cost money, and it's not going to be cheap, the hourly rates, if you're going to work with an hourly planner, it's going to range $250-500 an hour. Some will work by the project. You just say, listen, I just want to help with an assessment of my retirement plan. Those fees, though, can range $2,000-5,000 or more depending on how comprehensive the plan. If you want to work with an advisor to manage your money, most charge around 1% of your assets per year, and then the financial planning usually comes along with that.

I just want to highlight the places where you can find these types of financial planners who may be willing to work on an hourly or project basis. A few networks. One is the Advice-Only Network. This is a relatively new one. But some others that I've mentioned before, Garrett Planning Network, G-A-R-E-T-T. NAPFA, the National Association of Personal Financial Advisors, and then XY Planning Network. You just go to those sites, find someone in your area or someone you're comfortable working with who can work remotely, and then get that assessment. Then finally on the professional help, I will point out that you may actually have some access to professional help it might be through your employer that you might have a financial wellness program or an EAP. It might be through your 401(k) provider. They might provide access to a financial counselor of some kind. You might have it actually through your financial services firms you already have money with, especially some firms will give you access to a financial planner if you have a certain level of assets. Make sure you explore all those options as well. Stephanie, do you have any final thoughts for us on financial independence?

Stephanie Marini: We've gone through a lot of tools and guidelines, but I think one thing to point out is financial independence is a range, and it really means something different to everyone. It's so much more than just a dollar amount save, but it's more about the options that it provides, and that goes throughout all of life, not just as we're thinking about it in retirement. Whether that be you're keeping expenses low so that you don't have a high monthly overhead or having enough saved to be able to support your parents or even the ability to take breaks from a corporate ladder and pursue passion projects. I think financial freedom can mean many different things, and it's very personalized, so it's up to you to decide.

Robert Brokamp: Well, said, Stephanie, it comes down to determining what financial independence means to you and then aligning your finances so that you're on track to achieve it. With that, I want to thank Stephanie for joining us and thank you, dear Foolish listener, for spending part of your weekend with us. We hope you have a safe and jubilant July 4th. I'd also like to thank Bart Shannon, the outstanding engineer for this show.

As always, people on the program may have interest in the investments they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell investments based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show goes. I'm Robert Brokamp. Fool on, everybody.

JPMorgan Chase is an advertising partner of Motley Fool Money. Robert Brokamp, CFP, EA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Garrett Motion. The Motley Fool has a disclosure policy.