How Much Do You Need to Save for Retirement?

In Parade magazine's recent article on how much you'll need to save for retirement, they list a chart that details how much you have to have saved to be able to withdraw specific levels of income (at the 4% to 5% withdrawal rate recommended by experts). Here are the numbers:

• To withdraw $16,000 to $20,000, you need to have saved at least $400,000
• To withdraw $20,000 to $25,000, you need to have saved at least $500,000
• To withdraw $24,000 to $30,000, you need to have saved at least $600,000
• To withdraw $28,000 to $35,000, you need to have saved at least $700,000
• To withdraw $32,000 to $40,000, you need to have saved at least $800,000
• To withdraw $36,000 to $45,000, you need to have saved at least $900,000
• To withdraw $40,000 to $50,000, you need to have saved at least $1,000,000
• To withdraw $50,000 to $62,500, you need to have saved at least $1,250,000

So, how do these numbers make you feel -- good, because you're on track? Or bad because there's no chance you'll reach them? I like them -- if for no other reason than they'll help me get to my retirement number.

For more information and tips on how to save for retirement, see these links:

• Getting Rich is Simpler than You Think
• Save Now, Retire Rich
• How Much Goes in the 401k?
• How to Retire Rich: Use the Power of Compounding

FMF recommends Emigrant Direct.

Comments

[Anon]

I guess Parade has never heard of inflation?

[Yacapo]

I don't like to think about retirement. I would rather focus on getting out of this routine where I have to work for someone else most of my life just so I can finally relax when my best years have gone by. I like to plan for today and tomorrow, not for 30 years from now. That's just me.

[Marsha]

How much do you need for retirement? Can someone just give me a number. I know it's based on the standared of living you want to maintain, but really during retirement you won't need the big house (no kids will be living off of us). I hear the biggest expense during the golden years is medical. Do we need a million, two, what? Me & the hubby just turned 40 and between the two of us we have about $60k saved so far, we're both contributing 10%. What do we need to do to get to a million and will we need it, of course we'd like it, but what's realistic?

[FMF]

Marsha --

Sorry, there's not just one number -- you have to calculate your own. For help on how to do this, see this post:

http://www.freemoneyfinance.com/2006/08/how_i_set_my_re.html

[Charlie W]

I always believed the "experts" may be misleading us. Here's why:
a 4%-5% withdrawl rate essentally balances out the income of a well managed portfollio after inflation -- so while that nestegg may fluctuate, it may remain substancially the same forever. Excellent strategy to leave your offspring a tidy inheritance!

What if one calculates a $0. portfollio ballance at age 95? I figure the reasonable withdrawl rate would go up significantly.

Or is this just my wishful thinking?