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What to Do About Retirement’s ‘Known Unknowns’
In retirement planning, uncertainty is inevitable — but knowing what you don’t know can help you make smarter choices
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When it comes to retirement, knowing what you can’t predict is just as important as knowing what you can control.
Kyle Ellingson
Key takeaways
- The question of how much money you need to retire has no exact answer, because key variables like spending, market returns and lifespan are unknowable in advance.
- Focusing on what you can control, such as savings rates, healthy habits and investment risk, can reduce uncertainty.
- Building a backup plan for early retirement and aligning your portfolio with your timeline to retirement will help you weather unexpected changes.
I still remember the look on my 30-something friend’s face when I answered his question about how much money he would need in retirement.
“Well, actually, you can’t figure it out. There’s no mathematically right answer.”
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We were on a Zoom call, and for a second I thought the internet connection had failed, because his face froze. “What?” he sputtered. “What do you mean there’s no right answer?”
He’s an electrical engineer who works in quantum computing, and clearly he thought I was playing a trick on him. In his mind, this was just a complex math problem, and complex math problems can be solved — it’s what he does for a living.
“OK,” I said, “you can figure it out if you can give me the exact answers to the following questions. How long will you work? How much will you save each year? What will you spend every year once you retire? What will the financial markets return every year from now until you die? And the really hard one: When will you die?”
“Oh, I get it,” he said slowly. “I can’t come up with the exact amount of money I’ll need because I can’t answer any of these questions accurately. So what am I supposed to do?”
Don’t just run the numbers
It’s a great question, one that lies at the heart of the retirement savings challenge. This is, in essence, an unsolvable problem, because there are so many things we know we don’t know. That creates anxiety for everyone at almost every wealth level. I feel it myself, even though I’ve been in the business of retirement planning for more than 30 years.
Having run my own numbers far too many times, I can tell you that running them one more time won’t lessen your anxiety. But two things might.
One is developing robust, data-driven, best-guess answers to those pesky questions. And two is allowing that process to give you some confidence: Even if (or, more likely, when) things don’t work out quite the way you thought, you have a plan that can help you weather it.
It’s helpful to think about these questions in terms of what you can control and what you can’t. For instance, you have almost total control over how much you save today, and over your discretionary spending in retirement. (Medical expenses and long-term care are, of course, a different story.)
The average 401(k) contribution rate (including employer match) was just over 14 percent of gross income in 2025, according to Fidelity data, and financial professionals like me generally recommend saving and investing at least that for retirement. If you’ve been doing this consistently since your late 20s or early 30s, congratulations, you are probably in great shape!
If you’ve been saving less or started later, take a hard look at your discretionary spending and think about how you might adjust your lifestyle, both to save more today and to spend less in retirement.
Build a buffer for early retirement
You also have some control over how long you will work, but not complete control. A May 2026 Allianz study found that 42 percent of U.S. adults stopped working earlier than they had planned, often due to job loss or health issues.
Consider your options if you have to leave work sooner than anticipated. Would you have a buffer to absorb the loss of income? Could you delay tapping your retirement savings or claiming Social Security? You want to build your plan around a target retirement date, but also build in some backup for an early exit. It may create an incentive to bump up your savings a bit.
Even on the fraught and seemingly unknowable issue of longevity, you can gain some insights and some influence.
Life expectancy tables, while difficult to relate to, offer a baseline for planning. According to Social Security Administration actuarial data, the average U.S. man who reaches age 65 will live to about 83; the average woman to nearly 86. And remember, these are averages — many people will live longer.
You can’t know for sure if you’ll be one of those people, but information can help you make an educated guess. Luck (in the form of good genes) and lifestyle (in the form of healthy choices) can significantly affect how long you’ll live. A longevity calculator, such as the University of Connecticut’s Healthy Life Expectancy Calculator or The Longevity Game from insurance company Northwestern Mutual, estimates your potential lifespan based on your age, health, habits and family history. There are no guarantees, of course, but armed with data, you can make some informed projections about how long you’ll need your money to last.
Right-risk your portfolio
Then there’s the thing that’s totally out of your control but that often generates the most worry: what the markets will do. Trying to time the market — constantly shuffling your investments based on day-to-day fluctuations — is a risky game. You can, however, take steps to ensure your investments are “right-risked” for your goals.
Right-risking means ensuring that the risk level in your portfolio aligns with your time horizon (how long before you plan to retire). The more time you have, the more risk you can afford to take.
If you plan to retire in 30 years, for instance, it may make sense to put most of your investments in stocks, which carry more risk but offer higher returns. You want to maximize your nest egg. But if you are close to retirement, or in it and living off your investment accounts, you probably want to have fewer stocks (to avoid having to sell something at a loss because you need the money to live on) and more bonds, which are typically much less volatile.
Another good way to soothe market anxiety is to focus on returns over time, not all the time. In the short term, markets go up and down, sometimes in stress-inducing spurts. But over the long term, they tend to generate robust returns for investors. Keeping your eye on the big picture can go a long way in helping you sleep well at night.
I wish I could tell you that your worries over whether you are on the right track will disappear someday. They probably won’t. But the more you focus on controlling what you can — how much you save, your diet and exercise, right-risking your portfolio — the easier it will be to ride out the bouts of uncertainty that everyone, even the pros, experiences from time to time.
The key takeaways were created with the assistance of generative AI. An AARP editor reviewed and refined the content for accuracy and clarity.
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