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How much money do you need for retirement?


The question of how much money you need for retirement is difficult to answer. Technically, it’s impossible, since key influences such as one’s health, spending preferences, and length of life are only known after the fact.

How Money Do You Need in Retirement - What You Said

Previously, I asked my readership how much money they needed in order to retire. Participation in the poll was noteworthy, with approximately 1,000 individual responses. The results were telling too, as 42% indicated they’d need more than $1,000,000 to retire.

Of course, the average person knows they need a lot of money but has nowhere near enough. Average 401(k) plan balances are routinely in the mid-five figures, far short of the $1,000,000 a huge minority on this site understands is necessary for them to achieve the comfort they desire during their golden years.

Rules of Thumb

Many financial professionals have discussed the 4% rule. Basically, this means you first determine your net worth at retirement. Say it’s $500,000. If so, you can withdraw 4% of that amount, or $20,000, during the first year. During subsequent years you can take more out of your accounts by adjusting that $20,000 for inflation. So long as you follow the rule, the thinking goes, your odds of outliving your assets are extremely low.

Yet 4% of most people’s retirement net worth doesn’t leave room for much comfort, let alone extravagance. Furthermore, it doesn’t factor in their historical spending, existence of a pension, their debt level, home ownership, or other major components that will significantly affect whether such a rule would work for you. That’s why the 4% rule is just a rule of thumb.

Your Thoughts

What do you consider enough for retirement and why that amount? As you get close, does the target move? If so, in which direction? Please share your thoughts on these important retirement planning topics, first by answering the poll and then by sharing your experience.

Poll: How much money do you need to retire?
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