Retirement Planning in Boston, MA

How do you plan retirement in Boston?

Retirement planning in Boston comes down to matching a monthly spending number against dependable income, then testing what happens if prices, health costs or markets move. The Census Bureau counts 13.0 percent of residents as 65 or older, and the median household income is $97,344 (2020 to 2024 ACS). Those medians are a reference point, not a target.

A paycheck target, worked out

Planners often start at 70 to 80 percent of pre-retirement income as a rule of thumb, because work costs and savings contributions end. Take the Boston median household income of $97,344:

1. At 70 percent, the target is $68,141 a year, or about $5,678 a month.
2. At 80 percent, the target is $77,875 a year, or about $6,490 a month.
3. Subtract Social Security and any pension. What remains comes from savings.

A hypothetical household whose Social Security and pension total $45,000 a year, and who targets $68,141, needs $23,141 from savings. At a 4 percent starting withdrawal, a common planning figure that is not a promise, that calls for about $578,525 in invested accounts.

Social Security timing, in a table

Retirement planning in Boston includes a claiming decision that cannot be undone after the first year or so, so make it with the numbers in front of you.

Your own statement at ssa.gov shows the exact amounts. Married couples can stagger claims so the higher earner delays. For an overview of the account side, see retirement planning.

The Medicare gap before 65

Medicare coverage generally starts at 65, so anyone who leaves work at 62 needs three years of other coverage, and at 60 it is five. Options include a spouse’s employer plan, COBRA for a limited time, or a marketplace plan. Cost depends on income, so a planner may time withdrawals to keep taxable income in a sensible range for those years. Write the premium into the budget as its own line.

What does Massachusetts tax in retirement?

The state treats retirement income in layers. Social Security benefits have generally been left out of Massachusetts income tax, while pension payments, IRA withdrawals, interest and capital gains are taxed in different ways, so list each income stream and ask how each is handled. Estates are a separate matter. Massachusetts levies its own estate tax from a lower starting point than the federal government, which can matter for a large IRA plus a home. Rules and thresholds change, so confirm them with the Massachusetts Department of Revenue or a tax professional. Read tax planning for the federal side and estate planning for beneficiaries.

When should retirement planning in Boston start?

The useful window is five to ten years before the date you have in mind, though a first plan at any age beats none. A person in their thirties can learn whether a workplace plan match is being captured. A person at 55 can still shift savings, test a retire-at-62 scenario and price the health insurance gap. Retirement planning in Boston also benefits from a small monthly saving habit started early, and our budgeting and saving guide covers where to find the first $200 a month.

Public pensions and the Social Security question

Many public employees, including teachers and city staff, are covered by a state or local retirement system. Some of those jobs do not pay into Social Security, so a spouse’s benefit or your own work history elsewhere can change the picture. The rules around how a public pension affects Social Security have changed in recent years, so ask the pension office and Social Security for current figures before you pick a retirement date.

Which accounts to draw from first

A common starting order is taxable accounts, then tax-deferred accounts like a traditional IRA or 401(k), then Roth accounts, with adjustments for tax brackets. Required withdrawals from traditional accounts begin later in life, and the starting age depends on your birth year. Our investing basics guide covers account types. A hypothetical $500,000 traditional IRA withdrawn evenly over 25 years pays about $20,000 a year before growth and tax.

Housing in retirement

Retirement planning in Boston often turns on the house. The median home value is $731,700, and the median owner with a mortgage pays $2,986 a month. Some retirees in a triple-decker or a Jamaica Plain two-family keep a unit rented for income. Others sell and move to a condo or a smaller town. Each choice changes taxes, insurance and the monthly budget, so model them side by side. If a spouse depends on your income, review life insurance before you retire.

What retirement planning in Boston costs

• A one-time retirement review: often a flat fee from a few hundred to a few thousand dollars.
• Ongoing management: commonly around 1 percent of assets, so about $5,000 a year on $500,000.
• Hourly questions: a set rate for each meeting.
• Commission products such as annuities: the cost is built into the product, so ask for it in dollars.

These are general ranges, not quotes. Read the agreement and check registration at SEC IAPD and FINRA BrokerCheck.

How to choose help with retirement planning in Boston

1. Find one who regularly works with people within ten years of retiring.
2. Ask for a written income projection with your numbers and the assumptions stated.
3. Ask who pays the planner and how, in dollars.
4. Ask how withdrawals will be coordinated with taxes.
5. Meet twice before signing anything.

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Areas served

Advisors who serve the area work by phone or video with pre-retirees and retirees in Roslindale, West Roxbury, Jamaica Plain, Dorchester, South Boston, Charlestown and Beacon Hill, as well as nearby Quincy, Newton and Milton. Retirement planning in Boston does not require a trip downtown.

Frequently asked questions