How much do I need to retire?

February 09, 2021

People will often tell me, I need 1 million dollars to retire or I need 5 million dollars to retire.  I ask them how they know this and they will tell me they don’t know, it just seems like the amount they need.  It may have been because growing up 1 million seemed to be something to strive for – being a millionaire.


The truth is that the number someone needs to have in assets is totally different for everyone.  A couple might spend $160,000 per year but only need about $350,000 in assets to retire.  Why?  They may have very solid pensions that meet all of their spending needs.  They may also have long-term care insurance.  So, their additional spending needed from assets is very limited.*


The two most important factors to consider when determining the value of assets, you need before you retire are how much do you want to spend and what income sources will you have.  The rest needs to be made up from your investments.  Also – a simple rule of thumb would be you can use 4% of your assets each year for your spending.  So, if you have $500,000 in investment accounts, you should not spend much more than $20,000 each year from this income source.


This commentary was created by Aspire Planning Group and is for informational purposes only. The views expressed are based on current market conditions and are subject to change. The commentary does not take into account any investor’s particular investment objectives, strategies, tax status, or time horizon. There are no assurances that the techniques and strategies discussed are suitable for all investors or that the predicted results will occur. The commentary does not constitute investment advice, tax advice, or legal advice. All investments are subject to risk, and past performance is no guarantee of future results.
* The example above represents a hypothetical scenario and is for informational purposes only
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