Retirement Costs and Savings: How Much Is Enough?

Today, let’s get started on your journey to making work optional, on your own terms, and answering the question: how much do you really need? But really, what will your retirement costs look like?

MoneyWeek magazine recently put out a study that the cost of a comfortable retirement has increased from $37,300 to $43,100 for a single person and from $59,000 to $72,000 for a couple annually. This includes expenses like groceries, meals, and leisure activities.

And Kiplinger put out an article in April that Americans now believe they need nearly $1.5 million to retire comfortably, a significant increase from previous years. This estimate also considers factors like inflation and rising living costs.

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1 Do these numbers match up?

2 Episode Highlights

3 Links Relevant to this Episode

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Do these numbers match up?

If Americans think they need a $1.5 million nest egg to retire comfortably, we can use the most common benchmark that we hear when it comes to retirement planning: the 4% rule. Meaning, you can sustain withdrawing 4% (inflation-adjusted) from your assets with not too much fear of running out of money. So, if I have a nest egg of $1.5 million, I could withdraw 4%, or $60,000 each year, which is a pretty realistic number.

But more importantly, this benchmark is really good when you’re a long way away from retiring. It gives you something to aim for, which is important. However, as you get closer to retirement, maybe within 5 years, these benchmarks become much less meaningful.

In order to get to a place where you have confidence in your retirement-focused efforts, it’s much more important to go through your own process, so that you can focus on the right things. That’s the focus of today’s episode, so let’s get started.