Reader Question: I make $80,000 a year, and I was wondering if there’s an easy way to determine how much money a person would need to live comfortably after retirement.
A commonsense rule of thumb, if you’ve got your money invested in good growth stock mutual funds, is to pull from those funds at a rate that is lower than which they are growing. Otherwise, you’ll destroy them, right?
I tell folks if they want to pull off six percent to eight percent — I’m comfortable doing eight percent — then you’ve got to decide exactly how much you want to live on and what that means for your nest egg. If you want to live on $80,000 a year, it means you have to have a $1 million nest egg. If you want to live on $40,000 a year, then you need a half-million dollar nest egg for what we’re talking about here.
To get into that a little bit further, I would advise going to Chris Hogan’s website. He’s got a tool on there that takes just a few minutes, and it will give you exact numbers on what you need to do. It’s ChrisHogan360.com, and the tool is called the R:IQ — your Retire Inspired Quotient.
You can walk through it, and in just a few minutes you’ll know exactly what’s going on and what needs to happen!