Ever wondered how much money you need to finally say, “That’s it, I’m retiring!”?
I’m sure this question has crossed pretty much everybody’s mind at one time or another. As you probably already know, the answer is not a simple one. There are so many variables that can affect your retirement number: taxes, health care, return on investment, where you live, and how long you live, just to name a few.
Still, with all of these unknowns, you should set a goal to shoot for. The table below is an easy way to guesstimate how much money that you’ll need in retirement. Just select your expected monthly income need from the first column and then go across that row to see how much total savings will be needed for 20 years (middle column) or 30 years (third column) of retirement. For example, if I retire at age 65, expect to live another 30 years, and will need $5,000 a month, I’ll need to have about $1.06 million at age 65 to make it happen.
Don’t forget to subtract any pensions and/or social security from your monthly income need before using the table.
Give it a try and let me know if you have any questions.
Amount Needed in Savings for Retirement
| Monthly income need | Savings Needed for 20 Years | Savings Needed for 30 Years |
| $1,000 | $166,696 | $212,150 |
| $2,000 | $333,392 | $424,300 |
| $3,000 | $500,087 | $636,450 |
| $4,000 | $666,783 | $848,601 |
| $5,000 | $833,479 | $1,060,751 |
| $6,000 | $1,000,175 | $1,272,901 |
| $7,000 | $1,166,871 | $1,485,051 |
| $8,000 | $1,333,567 | $1,697,201 |
| $9,000 | $1,500,262 | $1,909,351 |
| $10,000 | $1,666,958 | $2,121,501 |
The above sums assume your portfolio will earn a 6 percent annualized return during the course of your retirement and endure 2 percent annual inflation erosion.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
