Is One Million Dollars the amount needed to retire?

I’m not sure why people even think that $1 Million is the magic number to retire.  Not sure who came up with that, not sure why people even believe that.  $1 Million is different for each person depending on so many variables.  You really want to retire early?  There are 3 magic numbers to know.

How much you need a month.

How many years you plan on being in retirement.

And then the 3rd number you need to know is the multiplier, which stems from the interest you plan on getting in retirement, a lot of people right now are saying to assume a conservative 4%.

Now let’s apply this, maybe even turn it into a formula.  We will assume the 4% conservative number.

For “x” years of retirement:

For 55 years, the multiplier is 267

For 45 years, the multiplier is 250

For 35 years, the multiplier is 225

For 25 years, the multiplier is 189

For 15 years, the multiplier is 135

Lets say you need 7k a month in retirement and you plan on 55 years in retirement.  The amount you need is 7k times 267, so 1,869,000

Lets say you need 7k a month in retirement and you plan on 45 years in retirement.  The amount you need is 7k times 250, so 1,750,000.00.

Keep in mind, using this system will leave you with 0.00 dollars after the retirement years are up.

To leave money left over after said retirement years, will change the multiplier.

Assuming a different interest rate will also change the multiplier.  But just as a general rule of thumb, assuming 4% and leaving 0.00 at the end of retirement, you can use this formula

Monthly income needed times multiplier (for how many years to be in retirement) equals amount needed to retire.

I’m sure there is a name for this “formula”, but I don’t know what it is, so I currently call it  “Bobby’s Retirement Multiplier” or BRM with my clients to make it fun and easy.

With that being said, I say to get your retirement number is to multiply income needed by “BRM” and that is the number needed to have retirement for said amount of year.

All this really is, is using Time Value of Money calculations, but making a lot easier for the average person to figure out what they need without having to know how to calculate Time Value of Money, TVM.

Have a different years in mind, let me know and I can get you that Multiplier needed!

This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation