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Subject:  Re: Asset Allocation Date:  4/6/2006  5:08 PM
Author:  ptheland Number:  50946 of 78166

Also, just how much money do YOU think a person needs in order to retire?

OK - to stick my neck out I'll say between 22 and 25 times your annual income would be in the right ballpark. Or perhaps more correctly would be about 25 times your expected annual retirement expenditures (with the expenditures including taxes).

Here's the math. Let X be your income before retirement. And let's assume that you save 15% of your income each year. (You can change this assumption later if you'd like.) Finally, let's use a withdrawal rate of 4%. That's the percentage of your retirement nest egg that you will withdraw each year - and my best recollection of the oft-discussed SWD. Again, you can adjust this as you see fit.

Since we assumed you're saving 15% of your income, you are spending 85% of it on something. And once you retire, we'll assume you stop adding to your retirement savings. So you really only need 85% of your pre-retirement income to l