Now, you know that you don't need to be rich to retire. That the secret to early retirement is in your spending not your savings. What do you do to make sure that the money you have saved will last the rest of your life?
You need to know how much you can safely take, from your retirement nest egg, so that you don't run out of money at some future point. There must be a method - there is.
The most common retirement method is to withdraw a fixed amount of money each year, based on a percentage, from your savings. What percentage can you safely withdraw each year?
Studies have determined that 3% to 4.75%, is the largest amount you can safely withdraw from your savings each year, to insure that you never run out of money during retirement.
Well, there's the method, and the percentage. It is how the retirement industry calculates (using 3% withdrawals), that a couple earning $120,000 per year, will need $3.2 million to retire. Hogwash.
Even at a higher 4.75% annual withdrawal rate the same couple will need $2 million dollars to retire.
And that is still wrong. Because it calculates your retirement based on your earnings.
Remember the Secret to Early Retiriment? It's not how much you make or save that matters - It's how much you spend. The actual amount you need to save for retirement could be much less.
