Retirement Calculator by Ramit Sethi
How close are you to having enough money in retirement? Tell us how much you want to have each year,how much you currently have, and we’ll tell you how much more you need to save.
This is based on Bill Bengen’s “4 percent rule,” which says that you can safely withdraw 4 percent of your portfolio every year of retirement—including increasing your withdrawals based on inflation—and not run out of money within 30 years
How Much Most People Need for Retirement = $1.8 Million
If you have $1.8 million, you’ll be able to comfortably retire in most cases. Let me explain.
Retirement age
Let’s say you retire at 65.
How long you’ll live
As of writing this, American women will live, on average, 14 years beyond 65, and men will live 8 years beyond 65—to ages 79 and 73, respectively.
Income
Assume you make the median household income of $70,784 and want to continue your lifestyle in retirement.
You need
$1.8 million ($1,770,100, to be exact).
That number isn’t random. It’s based on financial advisor Bill Bengen’s “4 percent rule,” which says that you can safely withdraw 4 percent of your portfolio every year of retirement—including increasing your withdrawals based on inflation—and not run out of money within 30 years.
We use 30 years because you want to protect yourself from running out of money before you die. Some bozos claim you can safely withdraw 8 percent per year (and “easily” make 12 percent in the market), but 4 percent is much more realistic. I cover this in more depth in my book I Will Teach You to Be Rich.
If you have $1.8 million in your portfolio, you can safely withdraw $72,000 per year—which, in this example, is exactly the current income you’re living on. You wanted to know the number, so there you go.
If you’re worried if you’ll “have enough” in retirement, I think you’ll get a lot out of my podcast with a couple who are nearing retirement. They have that fear too: