This week, the theme is how much money do you need to retire?

Each day this week, I’m breaking down this really big and important question into bit-sized pieces to help you better understand what it will take to retire with confidence, why the answer to this question is different for everyone, and how you can answer for yourself: How Much Money Do I Need To Retire?

A few years ago, there was a well-played commercial by ING where people walked around with their number. An oversized number that people hauled around with them while they walked the dog or commuted to work. The goal behind the commercial was to get people to figure out their number and what they needed to retire.

But too many of us, think of retirement as achieving a specific dollar amount. And while their isn’t anything inherently wrong with trying to amass a specific dollar amount for retirement, it can lead to some misguided decisions. 

Why? Because how much money you need to retire isn’t about a specific dollar amount. It’s about an income stream. How much income do you need to live a comfortable lifestyle in retirement. 

So your number is only one component of that. You may have rental income and social security. If you’re lucky you have a pension. And so the goal must be to first calculate your expenses in retirement, add up your other income sources, and then figure out how much income you’ll need to withdraw from your investments every year to make up the difference. 

So if you need to take $40,000/year of income from your retirement portfolio to plug that gap, then you probably need around $1,000,000 to retire. If you only need $20,000 a year from your portfolio, then you can likely retire with much less than $1,000,000.

So don’t fall into the myth that accumulating enough for retirement is all about the $ figure. It’s not. It’s all about the income. Start there and then use that to inform the dollar amount that will sustain the income needed for your lifestyle in retirement. 

That’s it for today. Before you go, though, if you haven’t already left a review in Amazon or iTunes for the One Minute Retirement Tip, can I ask a favor of you to go do that right now? It just takes a minute and it helps to spread the word, and helps other people find this podcast.

Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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