How Much Do I Need to Retire?

October 06, 2020
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As a general rule of thumb, you need somewhere between 30x to 40x your annual spending from investments to support your retirement assuming you are investing responsibly. The amount varies depending on your investment strategy and your goals, specifically retirement age. If you are retiring at 55, that 40x that amount is advisable. If you are retiring later, perhaps 65 or 70, 30x may be plenty. 

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Example - John and Sally are 65 years old. They need $7,000/month for their expenses. They receive $4,000 from Social Security so they need their investments to cover the other $3,000/month or $36,000/year. As a ballpark estimate, they need about $1,000,000 (see below).

Other things for them to consider might include large expenses like travel, car purchases, giving to family, and healthcare. All of these need to be included in the total amount. In addition, the amount can vary based on spending flexibility. For example, if John and Sally are willing and able to cut back to $6,000/month if market returns are bad, they may be able to retire with less.

Disclaimer:  Alex Voorhees and Reston Wealth Management do not provide legal, accounting or tax advice. This information is not intended to be a substitute for specific individualized investment, tax or legal advice. We suggest that you discuss your specific situation with a qualified investment, tax or legal advisor. The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. The views, thoughts, and opinions expressed in this blog belong solely to Alex Voorhees, and not necessarily to Reston Wealth Management. To determine which investment(s) or strategies may be appropriate for you, consult your financial advisor prior to investing. No strategy assures success or protects against loss. You should consider the investment objectives, risks, charges and expenses of any investment carefully before investing. You cannot invest directly in an index.