Here are the steps for quantifying (calculating) your savings requirement to support your retirement. Note, this is how an actuary would calculate your capital requirement (accumulated savings for retirement) as of the start of your first year of retirement in 10 years...but like all actuarial calculations, it is static...that is, its based on values and assumptions as of today. This WILL change over the year ahead, thus this calculation would need to be done prior to the beginning of each successive year so that adjustments can be made.You've provided some required information. I will make other reasonable assumptions. If you'd like to change any of these, let me know and I'll redo the calculation.Current ages of couple: 55Anticipated retirement age: 65Life expectancy for both: 90Wish each years withdrawal to increase by inflation (CPI)?: YesExpected annual average inflation rate: 2.5%Expected Social Security combined benefit at retirement: $36,000First retirement years household income requirement: $100,000Expected average annual investment return on a 30/70 portfolio in retirement: 6.25%Expected average annual investment return on a 40/60 pre-retirement portfolio: 7%Current retirement savings: $1,000,000Legacy (remainder of savings at end of life): 0The calculation for capital need requirement:N = Number of withdrawal years = 90 - 65 = 25I = expected average annual return adjusted for inflation = [(1.0625/1.025)-1] X 100 = 3.66%Payment = first years withdrawal amount = 100,000 - 36,000 = 64,000Future value at the end of life = 0Present Value (capital requirement) at beginning of first retirement year) = $1,074,680Present value of current savings: $1,000,000Expected average annual preretirement investment return: 7%Number of years to retirement: 10With no added savings made, the future value of the present value will be about $1,145,000.Thus, based on the above assumptions, you have an adequate savings to support your retirement.Let me know if you have any adjustments you'd like to make to the above values and assumptions.BruceM
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