Are your retirement investments substantial enough to provide the retirement income you need? Will they keep you comfortable for 20, 30, or more years of retirement? Follow these steps to estimate your retirement savings goal.
Determine how much you want to spend in retirement each year.
Add up monthly income you expect from non-portfolio sources.
Calculate the retirement income you'll need from your portfolio each month.
Estimate your retirement expenses.
Subtract your monthly non-portfolio income.
Subtract the appropriate level of income tax.
Estimate how large your portfolio needs to be.
Conservative to moderate investors expecting 30 years in retirement should target a portfolio of roughly 25 times the amount of their first-year portfolio withdrawal. Aggressive investors can target less, but not by much for certainty that the money will last and keep pace with inflation.
