Most middle-aged adults and soon-to-be retirees have the same question: How much do I need to retire?
We should consider this question at all ages and stages. There are no easy answers, nor is there a one-size-fits-all approach. Since how much you need for retirement is based on your specific needs and spending habits, your “number” will be vastly different from everyone else’s.
Consider, the “4 percent rule,” which is that you need enough saved to be able to meet your annual expenses in year one of retirement by withdrawing 4 percent of your nest egg. For example, if you need to generate from your savings $40,000 to cover a year of expenses, you’ll need to have $1 million saved for retirement ($1 million x 4% = $40,000).
We can reverse the math. Being able to withdraw 4 percent in a year means having 25 times your annual spending invested for retirement.
If you want $100,000 in annual spending, you’ll need a $2.5 million put away. If you cut your retirement spending in half, and live on $50,000, you’ll only need $1.25 million. Keep in mind that other sources of income, such as pensions and rental income, can reduce the amount of retirement income you’ll need from your investments.
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This has been our money kingdom financial perspective.
May I AM THAT I AM GOD prosper you.