25X annual expenses ???

[albireo13]

I notice a rule of thumb folks use for their nest egg goal is 25X annual expenses. I guess this comes from the 4% WR rule of thumb.

Anyway, do folks usually factor in other income streams in this?

Using the 25X rule, I figure we'd want $2.5M saved but we have $1.9M and won't get there by the time I retire.

However, we'll have significant retirement income from SS and pensions.

 

[VanWinkle]

I notice a rule of thumb folks use for their nest egg goal is 25X annual expenses. I guess this comes from the 4% WR rule of thumb.

Anyway, do folks usually factor in other income streams in this?

Using the 25X rule, I figure we'd want $2.5M saved but we have $1.9M and won't get there by the time I retire.

However, we'll have significant retirement income from SS and pensions.

The 25X rule is for 25 times the annual liability needed to be covered by your portfolio. I you need 60,000 per year and have 30,000 in SS and pension, you will need 30,000 per year from your portfolio. 25 x 30,000 = 750,000

You have to allow for taxes so maybe you need 35000 pre-tax or 35,000 x 25 = 875,000.

If you want to be conservative, some use 30X or 40X instead of 25.

 

[albireo13]

Ok, thx. That makes sense. I've been adding up my income sources and using a 4% WR metric for my estimates so, wanted to make sure I wasn't missing something.