Do You Need a Million Bucks to Retire?

This article idea came to mind after discussing with one of my readers. His questions looked like this: “I’ve heard I need about a million dollars to generate a $40,000 income at retirement” There are lots of rules of thumb surrounding retirement. You need to generate 70% of your job income at retirement. You should consider a 4% withdraw rate. You should invest differently (safer investments) now that you are retired. You should always save at least 10% of your income to retire happy. The average rate of return of a stock portfolio should be 8-10%. Which ones of these rules are right or wrong? In my opinion; they are all wrong. Why? Because none of them applies to everybody. Back to my readers question; do you need a million bucks to retire?

the answer is not universal; I know people that have retired and project total revenue in the range of $24K-$30K per year. They live simply, have no debts and don’t need more to be happy. Others will need over $50K annually before considering retirement. It’s all about knowing how much you need. One thing is for sure, you have to consider living up to 90-95. In my opinion, out surviving your savings is probably the worst case scenario you can have as a retiree. In order to reach 95 with enough money in your bank account, you will probably need to retire around 67-70 and have around $1M in savings. But it doesn’t have to be $1M in cash in an investment account; it could be a combination of many things; a pension plan, a rental property or even your own property (if free of debts) so you can sell your assets and continue to live your retirement dream.

Source: GuruFocus

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