[Francheska]

I know everyone’s number is different depending on annual expenses, but looking for a ballpark number to see how close to on track or behind I may be.

Thank you

[Christopher]

You’re going to get some weird results. Huge swaths of the population have essentially $0 saved for retirement at any age, so they’ll skew the average down below what you “should” have (and what you “should” have isn’t really easy to pin down either anyway). People in this group will have money skewer much higher than average.

It’s going to be personal and quite different for everyone.

[Mike]

I suggest thinking about it more organically than simply plugging numbers into an effectively magic (to you) calculator.

Start with what you expect to spend annually in retirement. Now bump that amount up 5-10% to account for potential emergencies, cost increases, etc. That’s safety measure #1.

Roughly, you want about 25 times that amount invested by the start of retirement. Which, as a baseline, gives you 25 years of income. Now obviously, you could (and hopefully will) live longer than 25 years after retirement, but you can only do what you can do, and so a 25 year goal is a generally acceptable and realistic goal. Of course if you have more, all the better. And you could consider that potential surplus as safeguard #2.

So, assuming an expected annual living cost of $50k, plus an additional 5% ($52.5k), times 25 years, you’re looking at a total of $1.325 million. That’s what you want to have invested by the time you retire and must rely on this fund for living expenses.

But of course that money isn’t just sitting there; it’s invested, presumably. And as such, there’s potential here for the life of that retirement fund to be extended well past 25 years. That’s safety measure #3.

Now at this point, we could really get into the weeds of how to accommodate for average annualized returns—which for the record you should probably familiarize yourself with if you haven’t already—but here’s the basics:

– Stay invested in the broad market. No matter what. Do not try to time the market.

– Automatically reinvest all dividends.

– Never withdraw more than your target expected annual expenses in any given year (in the example case, that’s $52.5k). If realistically possible, withdraw even less.

And that’s it. Follow that plan, and you’ll effectively mitigate most risk of going broke from typical market fluctuations—even a recession or two. There’s still risk, of course, but you can’t account for everything.

Explore these too: How does one calculate what their monthly needs will be in retirement?

[Ken]

best thing to do, set up a projected Expense sheet. Track that each year, imputing estimate, actual and % change of actual to prior year actual. Do that for 5 years and you will have a better idea of real life expenses.

I have been retired now 2 years and my actual expenses are less that what I projected.

Even with the big inflation hikes. PS having a steady rental income helps, as that goes up with inflation.

Retirement income stream variety is the crucial to success.

[Rosemarie]

Very basic info:

– Save 12-15% of your income is the common advisor advice.

– Figure out what YOU need. Add up expected retirement expenses to see what you will need. Subtract any SS or pension you will receive, the result is what you need to save for in investments.

– Use a 4% withdrawal rate, so for $100,000 invested you would be able to take out $4,000 a year safely.

E.g. house paid off, need $60k a year to live. SS will pay combined $36,000 a year. Investments need to make up the other $24,000 so you would need at least $600k saved up.

Work backwards to determine how much to save to reach your needed goal.

Lots of other variables, but if you can do at least this much, you will be ahead of most retirees.

Also, check out: I am transitioning into early retirement – Times are tough anyway, what are ya’ll doing to make the way easier?

[Jeane]

I think it’s 1x your salary by 30, 2x by 40, something like that…

[Author]

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