I have spent quite some time looking for the amount of retirement savings needed. However, I am always perplexed by the way most publications came up with their magic numbers. For example, traditional retirement planning has no problem of identifying the annual expense ($50k, $80k, etc.). Then they quickly throw an arbitrary factor (from 8x to 30x) to come up a rough lump sum ($1M , $2M, etc.). Most of them devoutly use 4% withdraw rate.
It doesn't take the later-on SS into account. Therefore, the required lump sums are always too large and too conservative. Because of these typical published estimates and withdraw rules, no one feels safe to ER if the nest egg worth is less than $1M, even though, according to a recent finding, the average value of retirement accounts for people between 55 and 64 is only $148,900.
So, let's think about it. If you cannot retire with $800k, how can those with less than $150k ever retire?
I am going to show my way of calculation.
It doesn't take the later-on SS into account. Therefore, the required lump sums are always too large and too conservative. Because of these typical published estimates and withdraw rules, no one feels safe to ER if the nest egg worth is less than $1M, even though, according to a recent finding, the average value of retirement accounts for people between 55 and 64 is only $148,900.
So, let's think about it. If you cannot retire with $800k, how can those with less than $150k ever retire?
I am going to show my way of calculation.
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