How much?

John wonders how much we will need to live comfortably after retirement. Dave gives him a quick way to determine the amount, plus some extra advice for making the process even easier.

QUESTION: John calls in from Knoxville, TN. He makes $80,000 a year, and he wonders how much money he will need to live comfortably after retirement. Dave gives him a quick way to determine this figure, along with some other advice to help make crunching the numbers a little bit easier.

ANSWER: A good rule of thumb, if you’ve got your money invested in good growth stock mutual funds, is to pull from those funds at a rate that is lower than which they are growing. Otherwise, you’ll destroy them, right?

I tell folks if they want to pull off six percent to eight percent — I’m comfortable doing eight percent — then you’ve got to decide exactly how much you want to live on and what that means for your nest egg. If you want to live on $80,000 a year, it means you have to have a $1 million nest egg. If you want to live on $40,000 a year, then you need a half-million dollar nest egg for what we’re talking about here.

To get into that a little bit further, the best thing to do is go to Chris Hogan’s website. He’s got a quick tool on there that takes about 10 or 15 minutes to walk through. It will give you exact numbers on what you need to do. It’s ChrisHogan360.com, and the tool is called the R:IQ — your Retire Inspired Quotient. You ask what your number is, and that’s what it will give you in detail. You can walk through it, really dig into it, and in just a few minutes you’ll know exactly what’s going on and you’ll have things lined up.

I’ll send you a copy of Chris’s book as well. It’s called Retire Inspired, and it’ll help you do this.