Retirement Planning Essentials: How Much Do You Really Need?

One of the most common questions in personal finance is: How much do I need to retire? While the answer varies by individual, there are proven strategies to help you find your number.

The 4% rule is a widely used guideline. It suggests you can withdraw 4% of your retirement savings in the first year, adjusted for inflation annually, with a high probability of not running out of money over 30 years.

To use this rule, multiply your desired annual retirement income by 25. If you need $50,000 per year, your target nest egg is $1.25 million. This accounts for other income sources like Social Security.

Start saving early, take advantage of employer 401(k) matches, and maximize tax-advantaged accounts. A 25-year-old saving $500 monthly at 7% return will have about $1.2 million by age 65.