One of the most important retirement planning questions is also one of the most difficult to answer: "How much money will I need to retire?"
Common Approaches to Estimating Retirement Needs
A common guideline suggests aiming to replace 70% to 85% of your pre-retirement income annually. This can help maintain your lifestyle while adjusting for reduced work-related costs. Another rule of thumb: The 4% withdrawal rule, which suggests withdrawing 4% of your portfolio annually in retirement. Using this model, you’d need $2 million to safely withdraw $80,000 per year. But at the end of the day, your retirement needs calculation will come down to your personal goals and situation.
Factors That Affect Your Target Number
- Expected lifestyle
- Healthcare costs
- Inflation
- Longevity
- Other income sources (e.g., pensions, Social Security)
Personalized Planning Is Key
Generic calculators can’t fully capture your unique situation. A high-net-worth individual may have complex needs, including charitable giving, business succession planning, or legacy goals. It’s important to work with a wealth management team who can help you not only identify your retirement goals, but create a customized plan for how to get you there.
How Foster & Motley Can Help
Retirement isn’t about hitting a magic number — it’s about preparing your wealth to support the life you want to lead. Work with Foster & Motley to clarify your future with a retirement plan as unique as your goals.
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