Decide now how much you need in your retirement account

Published: July 27, 2016

Dave Ramsey

Dear Dave,
I make $80,000 a year, and I was wondering if there’s an easy way to determine how much money a person would need to live comfortably after retirement.
John

Dear John,
A commonsense rule of thumb, if you’ve got your money invested in good growth stock mutual funds, is to pull from those funds at a rate that is lower than which they are growing. Otherwise, you’ll destroy them, right?

I tell folks if they want to pull off 6 percent to 8 percent — I’m comfortable doing 8 percent — then you’ve got to decide exactly how much you want to live on and what that means for your nest egg. If you want to live on $80,000 a year, it means you have to have a $1 million nest egg. If you want to live on $40,000 a year, then you need a half-million dollar nest egg for what we’re talking about here.

To get into that a little bit further, I would advise going to Chris Hogan’s website. He’s got a tool on there that takes just a few minutes, and it will give you exact numbers on what you need to do. It’s ChrisHogan360.com, and the tool is called the R:IQ — your Retire Inspired Quotient.

You can walk through it, and in just a few minutes you’ll know exactly what’s going on and what needs to happen.
—Dave

Dave Ramsey has five New York Times best-selling books. “The Dave Ramsey Show” is heard by more than 8.5 million listeners each week on more than 550 radio stations. Ramsey’s latest project, EveryDollar, is a free online budget tool.