How Much Money Do I Need to Retire? (60 Minute Financial Solutions)

One of the techniques for managing the risk of living longer is to vary your withdrawals by giving yourself a raise only when your assets grow. Again, you start with the now familiar 4% of assets payout as implied by the Rule of 25, but rather than give yourself an automatic raise based on inflation, you instead only increase spending when your ass

The real goal is sustainable spending, not portfolio value. That’s why this simple cash flow model works so well. Assets are just the middleman that throws off the income and is at best loosely correlated to what really matters: spendable money to pay the bills.

Income from a lifestyle business or hobby business reduces retirement savings needs just like reduced spending. For every $1,000 per month earned, it reduces savings needs by roughly $300,000.

However, my three-rule cash flow-based model completely eliminates poverty consciousness because you’re only spending income. You feel perpetually wealthy, abundant, and financially secure. The value of this cannot be overstated when contrasted with a traditional asset-based model.

What all this means is that you can make mincemeat out of traditional retirement modeling by getting creative with your assumptions. Now that you know how the game works, you can plan accordingly. You can acquire a rental property or two in your 40s and 50s so you have inflation-adjusting income for the rest of your life. You can learn investment s

Stated another way, some people prefer to work at saving money rather than work at earning it. It’s not for everyone, but I’d be remiss not to list it because it’s a very effective strategy since every $1,000 per month you don’t spend is $300,000 you don’t need to save. Extreme frugality can knock millions off how much money you need to retire and

To drive that point home, let’s examine some retirement planning models that even a math-phobic would love because they’re so incredibly simple. You can decide for yourself if this overwhelming simplicity changes your conclusion about how much is enough to retire? The first simple model is known as the Rule of 25. According to this rule, you figure

In other words, rather than choose your spending based on your income needs, choose your spending based on what research says your assets and market conditions can support. If the markets are in the top quartile of historical valuations when you retire, then start with very conservative spending plans. You might even want to consider inflation-adju