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This is based on Bill Bengen\u2019s \u201c4 percent rule,\u201d which says that you can safely withdraw 4 percent of your portfolio every year of retirement\u2014including increasing your withdrawals based on inflation\u2014and not run out of money within 30 years<\/p>\n
How Much Most People Need for Retirement = $1.8 Million<\/h2>\n If you have $1.8 million, you\u2019ll be able to comfortably retire in most cases. Let me explain.<\/p>\n
Retirement age<\/h4>\n Let\u2019s say you retire at 65.<\/p>\n
How long you\u2019ll live<\/h4>\n As of writing this, American women will live, on average, 14 years beyond 65, and men will live 8 years beyond 65\u2014to ages 79 and 73, respectively.<\/p>\n
Income<\/h4>\n Assume you make the median household income of $70,784 and want to continue your lifestyle in retirement.<\/p>\n
You need<\/h4>\n $1.8 million ($1,770,100, to be exact).<\/p>\n
That number isn\u2019t random. It\u2019s based on financial advisor Bill Bengen\u2019s \u201c4 percent rule,\u201d which says that you can safely withdraw 4 percent of your portfolio every year of retirement\u2014including increasing your withdrawals based on inflation\u2014and not run out of money within 30 years.<\/p>\n
We use 30 years because you want to protect yourself from running out of money before you die. Some bozos claim you can safely withdraw 8 percent per year (and \u201ceasily\u201d make 12 percent in the market), but 4 percent is much more realistic. I cover this in more depth in my book I Will Teach You to Be Rich.<\/p>\n
If you have $1.8 million in your portfolio, you can safely withdraw $72,000 per year\u2014which, in this example, is exactly the current income you\u2019re living on. You wanted to know the number, so there you go.<\/p>\n
If you\u2019re worried if you\u2019ll \u201chave enough\u201d in retirement, I think you\u2019ll get a lot out of my podcast with a couple who are nearing retirement. They have that fear too:<\/p>\n