How much money do you really need to retire?

$2 million? $5 million?

The problem with those numbers is simple: whose retirement are we talking about?

Two people can have identical portfolios and need dramatically different amounts depending on their spending, Social Security, pensions, housing, taxes, retirement age and other income.

In this episode of Retire Free, I show you a simple four-step framework for finding your retirement number:

1. Estimate your annual retirement spending

2. Add up your reliable income — Social Security, pensions, annuity income, etc.

3. Subtract that income from your spending to find the gap

4. Divide the gap by an appropriate withdrawal rate

That's the basic math. How Much Do You Need To Retire …

Then we look at a hypothetical couple spending $200,000 per year with $45,000 of Social Security income. Their portfolio needs to cover roughly $155,000 annually, putting their target near $3.9 million at a 4% starting withdrawal rate.

Reduce spending to $180,000, however, and the target falls to roughly $3.4 million.

A relatively small lifestyle change moved the retirement number by approximately half a million dollars. How Much Do You Need To Retire …

We also cover:

• Why the 4% rule is a starting point, not a guarantee

• How Social Security fits into the calculation

• Why $4 million in a pre-tax 401(k) isn't $4 million of spending power

• RSUs, stock options and company-stock concentration

• Healthcare costs

• Why you should stress-test retirement against bad markets, inflation and longevity

• What to do if you're 5+ years out, 2–3 years out, or already retired How Much Do You Need To Retire …

Your retirement number isn't somebody else's headline. It's the number that supports the life you actually want to live.

Learn more at Freedom Day Wealth Management.

Freedom Day Wealth Management

More Than A Finish Line.

Educational content only. This is not individualized investment or tax advice.