By Andrew Rosen via Iris.xyz
Every retirement plan is unique and asks the age old question: How much do I need to retire? It takes a lot of finesse to devise each individual’s “magic” retirement age and dollar amount. The industry’s rule of thumb is to draw down 4% of one’s assets in a 60/40 portfolio, which often leads to the best probability of sustaining a 30yr retirement. Personally, I hate using that “rule;” the answer is far from that simple. When trying to ascertain your personalized retirement age, here are some items to consider.
You can’t determine what you need if you don’t know how much you should anticipate retirement to cost.
Start by figuring out the type of retirement you want. If you are like most, you want to maintain your current lifestyle. With that assumption, do you really have a good sense of your expenses? Most people’s estimates are off by 10–20%.
If you’re planning a long retirement and are under by 10%-20%, it will make a significant difference. If you don’t keep good records, I suggest looking at your current after-tax paycheck. Then, add back health insurance costs and subtract any additional after-tax savings. This should reveal your estimated monthly costs.
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