Calculated answer
$57,000
The example includes $18,000 from Social Security, pension, rental, dividend, and other passive income sources. At 4%, a $500,000 portfolio supports about $20,000 per year, leaving a shortfall of $37,000.
- Annual income gap
- $57,000
- Non-portfolio income
- $18,000
- Portfolio-supported income
- $20,000
- Shortfall
- $37,000
Income gap = desired retirement income − non-portfolio income
The portfolio is then checked separately by applying the chosen withdrawal rate to the invested balance.
- Start with a desired retirement income of $75,000 per year.
- Add non-portfolio sources such as Social Security, pension, rental income, dividends, and other passive cash flow.
- Subtract those sources to find the remaining gap.
- Apply the 4% withdrawal rate to $500,000 to estimate how much the portfolio may cover.
Why the income gap matters
Retirement planning often feels more practical when income sources are separated into dependable non-portfolio cash flow and the amount the portfolio must fund.
That separation makes it easier to stress-test taxes, withdrawal rates, part-time work, and changes in spending assumptions.
What this example leaves out
This simplified view does not model taxes on each income source, future benefit changes, sequence-of-returns risk, or spending that changes over time.
It should be used as an educational planning snapshot rather than a full retirement cash-flow forecast.