How much wealth do you need in order to retire? Probably more than you think. Most retirees spend anywhere from 60% to 125% of their current spending after they retire. Insurance and commuting costs might go down but vacations and other recreational expenses may go up. Assume, for example, that a family grosses $100,000 per year. After taxes and investments (including retirement plan contributions), that family might spend $75,000 per year. That’s a reasonable target for retirement spending.
As a general rule, if you’ll need to spend $50,000 per year in retirement, expect that you’ll have to accumulate upwards of $750,000 in a retirement portfolio. So get busy and start investing.
