How do you figure out how much you need to retire?

How much do I need to retire?

This is such a big question and many factors go into figuring out the answer.  Even then the answer isn't the "correct" answer because a lot can change between the time you figure this out, retire, and say so long to this world.

You can try to account for the following:

  • How many years you will live post-retirement (a guess at best, but better to have high expectations for longevity)
  • How much money you will need o live on each year (does anyone really know how much healthcare is going to cost?!)
  • How much you want to leave behind to your heirs (unless you want to die with zero assets)
  • Your likely tax rates, expected inflation, investment drawdown rate, and investment rate of return.

But all of these variables are just that - variables.  

Google "how much do I need to retire" and find a seemingly endless list of websites with their own or licensed calculators to help you figure this out.  I prefer running numbers using about 3 different calculators and usually avoid relying on Social Security as part of my retirement income, especially since I plan on retiring at 35 and won't have access to full Social Security for at least another 32 years.  

Darrow Kirkpatrick at Can I Retire Yet does a great write-up of his top three retirement calculators, Vanguard's Retirement Nest Egg Calculator, the Ultimate Retirement Calculator from Todd Tresidder, and the Flexible Retirement Planner.  There is no sense in me recreating the wheel, so please hop on over to his site to see what he has to say about each of these.