How Much Money Will You Need To Retire?

Posted on October 5, 2012 at 3:06 pm

(Forbes) As baby boomers inch toward retirement, they increasingly want to know what The Number is – meaning how much they need to retire in comfort and security. One of the best minds on this topic, and many other personal finance issues, is advisor Ray Ferrara, head of ProVise Management Group in Clearwater, Fla. His take on this vital subject:

A series of recent reports shows how Americans, especially those nearing retirement, face some tough challenges. The big questions are: How much money will you need to retire? Are your investments performing well enough to meet your needs? Do your kids’ student loans hurt you? Is your income declining or rising?

Retirement: How Much Will You Need? Is there an easy formula to determine the size of the nest egg you need when you enter retirement?  The answer obviously is no, but there are some rules of thumb you can follow.

Let’s assume you want to increase your spending power by a 3% rate of inflation and that your portfolio achieves an annual return of 5%, ignoring any taxes and not illustrative of any specific investment or portfolio. Obviously, none of this is guaranteed.

For every $1,000 per month you want to have for a 20-year period, at the end of which the portfolio is zero, you need a lump sum of $196,000, according to BTN Research. Thus, if you want $10,000 per month, you must have a lump sum of $1.96 million. If you feel like you have really good genes and expect to live 30 years in retirement, then the present value of that stream of money must be $269,000 per $1,000, or $2.69 million for $10,000 per month.  If you keep everything the same, but assume a 6% positive return, the lump sum required is $179,000 per $1,000 for a 20-year payout and $237,000 for a 30-year span. READ MORE

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One comment

  1. Comment by Shalanda on December 8, 2019 at 10:00 am

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