I’ll start with one good question posed, because it probably crosses everyone’s mind with increased frequency over time:  How much money do I need to retire?

Since I’ve been a financial professional now for more than two decades, I feel well qualified to answer that question.  The answer is:  It depends.

Okay, I realize that isn’t a very helpful answer, even if it’s the truth.  Let’s dig a little deeper.

From a purely quantitative perspective, there are several rules of thumb in common use.  For example, some say if you’ve got 20 or 25 times your annual income in reserve that should do it. Others suggest you’re ready to retire if you can withdraw no more than 4% of your investment portfolio each year.  So, if you have $1 million in your investment accounts, you should plan to withdraw no more than $40,000 annually in a “successful” retirement.

These and similar guidelines offer a decent starting point.  But bad luck happens.  Even if you’ve diligently saved up 20 times your income, if you happened to retire on the eve of a bear market or if you encounter large unexpected expenses, your handy rule of thumb could end up poking you in the eye. Continue Reading…