How Much Money Do You Need to Retire?

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A common question among readers of this blog is “How Much Money Do I Need to Retire?”. In fact, for many people that is the question they are trying to answer when they ask “Can I Retire Yet?”.

Looking into a crystal ball

Bill Bengen was a financial planner trying to answer that question for his clients. He published research in the Journal of Financial Planning in October 1994 that revolutionized retirement planning. Bengen’s research showed that 4% is the maximum safe withdrawal rate (SWR) when initiating withdrawals from a retirement portfolio.

In the three decades since, this has been an area of ongoing research and debate. Is 4% too high or too low of a SWR? How does SWR research apply to longer time frames for those pursuing early retirement?

These are important questions as we plan for retirement. But is all of the ongoing research and debate making us lose sight of a more important question?

Finding the Right Safe Withdrawal Rate

Current research continues to focus on determining what the safe withdrawal rate is given prevailing conditions. The consensus among leading researchers, at least through the end of 2021 when we had a combination of abnormally high stock valuations and low interest rates, was that a 4% withdrawal rate was not sustainable. It was likely too high.

Examples from this camp include leading retirement researcher Wade Pfau. His voice was among the first I heard challenging the 4% rule based on his research using non-US stock and bond returns. He became more vocal in his objections as interest rates fell and stock values grew.

Karsten Jeske has been a critic of the 4% rule for those pursuing FIRE. He’s shown that longevity risk increases when you apply this rule to longer retirement time horizons. A study published by Morningstar opined that even for traditional retirees, 4% was likely too aggressive given conditions in 2021.

However, not everyone agrees with these sentiments. A vocal dissenter is Bill Bengen, the same person who introduced the 4% rule decades earlier. In an interview with Michael Kitces, Bengen emphasized that in his original research he was looking for the absolute worst case scenario. He opined 4% is likely far too conservative most of the time. He has not wavered in that position, even in the face of recent high inflation and challenging market conditions.

It is worth stepping back to ask an important question. Why is so much time and energy spent researching and debating safe withdrawal rates?

Related: My Retirement Flexibility Scale for Choosing Your Safe Withdrawal Rate

Solve For X

The idea behind safe withdrawal rates is that they enable you to know how much you can safely spend from a retirement portfolio. Safety is defined as having little to no chance of outliving your portfolio.

Simply multiply your initial portfolio value by the safe withdrawal rate to determine your initial annual withdrawal. In equation form it looks like this:

Initial Portfolio Value X SWR = Initial Annual Spend

From this three variable equation, if you know any two of the variables you can determine the third. So determining how much money you need to retire, is a matter of shifting the equation around like this:

Required Initial Portfolio Value = Initial Annual Spend/SWR

If you can determine both your annual spending and the SWR with confidence, then you can determine how much money you need to retire. 

How much money do I need to retire? This profoundly important question can be boiled down to simple math. You just plug in those two known variables and solve for X.

Solve For “You”

Here lies the problem with this entire approach. We have intelligent individuals with professional credentials, PhDs, and teams of researchers going through immense amounts of data. The idea behind their research is that the hard part is figuring out the relationship between market returns, interest rates, and inflation to determine the correct SWR.

This assumes we know who we are and what our wants and needs are now. It also assumes that our wants and needs will stay, or at least cost, the same over the course of our retirement, adjusted only to match the general rate of inflation. For traditional retirees, that time frame may be 30 years or more. For a FIRE type of retiree, we may be talking about 50+ years!

When I think about my own retirement, I like to consider this handsome little fellow.

That is a picture of me at two years of age. I am now 46 years old. That is a difference of 44 years.

When I run simulations in one of my favorite retirement calculators, I always assume I will live at least until age 90. That is another 44 years.

As I look at that picture, I know it is me. That little guy and I share the same name, birthdate, Social Security number, and DNA.

Yet, even beyond the physical growth and aging, I don’t see that person having much in common with the me of today. Why would I assume that who I am won’t change at least as much in the ensuing four plus decades?

This got me thinking and reading about how we change as we age.

Life’s Two Halves

There is a body of literature exploring this topic. A number of books break our lives into two halves. These books have common themes. One is that it is almost as though we are entirely different people in the first and second halves of life. 

The first half of life is driven by ego. We pursue worldly signs of success, accumulating status, titles, power, money, and possessions. We need to break away from our original families and forge our own identities.

The second half of life is characterized by a search for deeper meaning. Common themes of the second half are an increased focus on relationships, service to others, and purpose. This stage of life is characterized by maturity and wisdom.

It is important to understand that the word halves is used conceptually. We all know young people who seem mature beyond their years. Others never do the inner work required to make this transition and seem perpetually trapped in the first half.

As I learned about this concept, I couldn’t help but see the connection to conversations I’ve had with others in the pursuit of financial independence. There tends to be a rejection of the first half of life ideals and an embracing of those associated with the second half.

These topics deserve more of our time and attention. If you are interested in diving deeper I recommend three books to get started:

We’re Constantly Changing

While there is overlap between the concepts of life’s two halves and the pursuit of financial independence, they don’t match perfectly. You certainly don’t magically become a “second half of life” person once you hit a number on a spreadsheet or leave your job. 

Many times we embrace the second half of life concepts after a major life event, be it positive or traumatic. Often we become disillusioned with what society suggests we should value. These events don’t necessarily coincide with our financial position at that time.

We may start embracing second half of life concepts, but still have to devote much of our life to working a job to pay the bills. Or we may accept second half of life principles long after achieving financial independence…. or never embrace them at all.

Another challenge is that for most of us there isn’t a clear line of demarcation between the first half and second half of life. Instead, we are constantly growing, changing, learning, and evolving throughout our lives.

Some of you may feel certain that you have put a lot of thought into what is important to you and have aligned your life with that. Maybe you have.

Even if you have found happiness and contentment now, things around us change. They include but are not limited to:

  • Health/ Aging
  • Relationships
  • Neighborhoods, states, and even nations
  • Laws
  • Economic environments

This summer, I had the opportunity to discuss my personal evolution at a CampFI event. My life’s direction has taken several radical shifts, none of which I would have predicted. Understanding that the future is unknown impacts how we plan for it.

You can watch an edited version of the talk here:

What to Do?

We are all changing as we go through life. This adds an additional element of uncertainty to retirement planning. 

This personal aspect of the calculus doesn’t get the same attention from researchers that the hard numbers that drive safe withdrawal rates do. That doesn’t mean that predicting who we will become, what we will want, and what future versions of our lives will cost is any less challenging than predicting future market returns, interest rates, or inflation.

We all want certainty. Unfortunately, I can’t provide any.

I can provide some observations from reflections on my own life and conversations with many other people. I can also share an exercise and mental framework I’ve found helpful in my own planning.

Understand What Matters

I have observed persistent patterns across periods of radical changes in my own life, talking to others of diverse backgrounds, and studying what adds meaning to people’s lives. There is a consistent pattern of what is important, in order from most to least:

  1. Relationships
  2. Experiences
  3. Things

Plan accordingly.

Get Personal

As you try to “solve for you” it is important to reflect on who you are. While I’ve changed significantly throughout my life, upon reflection I’ve been able to identify a few constants across time. Here are a few prompts to help you do the same.

I am most happy when I’m….

I feel most fulfilled when I’m….

My answers were:

  • Doing hard things
  • Outdoors 
  • With people I love
  • In service to others

Once you identify the specific things that are most important to you, think about how that may manifest in the future and build the time and financial capacity into your plans to accommodate them.

Be Humble and Flexible

Predicting the future is impossible. Acknowledge this fact and make it a part of your planning.

At each step of my journey, I have been grateful that I have been able to change, grow, and take advantage of new opportunities as they presented themself. This was a direct result of my growing financial freedom and the personal freedom it provided.

As I approached financial independence and early retirement, I was careful to take a path that continued to allow for future growth and that could accommodate an unknowable future.

Related: Redefining Retirement

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Valuable Resources

  • The Best Retirement Calculators can help you perform detailed retirement simulations including modeling withdrawal strategies, federal and state income taxes, healthcare expenses, and more. Can I Retire Yet? partners with two of the best.
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  • Monitor Your Investment Portfolio
    • Sign up for a free Empower account to gain access to track your asset allocation, investment performance, individual account balances, net worth, cash flow, and investment expenses.
  • Our Books

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[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to Financial planning inquiries can be sent to]

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    1. Stephanie,

      A big part of Bengen’s argument in the Michael Kitces interview was that inflation at the time was low and he anticipated it staying that way. So do I think he would change his tune in the face of high inflation? Yes.

      However, if you read the second linked article from this year after inflation was soaring, he still was confident in a 4+% withdrawal rate. It is important to note however, that Bengen views his research as an academic exercise and in practice he does not maintain a buy and hold approach, but is a market timer based on anticipated returns given prevailing market/interest rate conditions.

      I do not recommend you follow his (or any other specific) approach. I just am sharing what his personal approach is and how it relates to his and other academic research so you can make an informed decision for yourself.

      Hope that helps.


  1. While you may have given a nice description of the 4% rule; it application validity etc, you really failed to answer the first and most important question – “How much do I need to retired”.

    I think that to retire (at least retire comfortably and happily) you should use the 4% rule as a guide to determine how much you will have in retirement (given your savings). How much you need yearly should be essentially what you are spending now for your lifestyle. Remember, after retirement the same bills will continue to show up in the mailbox, the same travel and vacations will be desired, and the same maintenance costs for the house and car exist. In other words what I spend before retirement and after retirement probably doesn’t change that much. If you can’t afford the same lifestyle in retirement you probably won’t be happy.

    1. Shawn,

      I agree that I don’t have the simple answer to this complicated question. I agree that the 4% rule is a great STARTING POINT to determine how much you need for a number of reasons that I’ve written and spoke about at length over the years. However, I disagree that things will necessarily stay essentially the same. That may be the case if you paint yourself into that corner. However, I am much less confident in the ability to predict the future.

      Consider that housing is the largest expense in most households. So yes, if you are certain that you will never want to move and particularly if you own your home outright or have a fixed rate mortgage, then you can likely assume that expense will remain constant. However, if you decide you want to move for any number of reasons (family, change in climate, demographics, safety, etc.) of your area, then you may find that costs of living are drastically different in different areas.

      Another example you site is desiring “the same travel and vacations.” That is absolutely not true in my life only 5 years into retirement. My mom is suffering with a severe medical diagnosis. I built into my budget to make 1-2 trips back to PA (from my current home in UT) as what I THOUGHT I would desire. This past year, I have made 6 such trips to spend time with her, give some relief to my dad and brother who are serving as caretakers, etc. I didn’t anticipate this being the case, nor did I anticipate the additional costs and complications of traveling during and in the labor shortages post-pandemic. But this is where we are, is it not? This travel also does not displace my desire for other travel to have fun with my own immediate family, expose my daughter to different cultures, experiences, etc. It is an additional desire which comes with additional expense and time commitments.

      I think a dose of humility is required when we are planning decades into the future. There is simply a lot we don’t know.


      1. Chris,

        Why did you remove Shawn’s given link in his post? I guess I was either lucky or fast enough to visit your article and see his comment with a link to his (?) argument. I’ve started reading so I don’t know how good/strong his arguments are, but the beginning of his article sounds promising and I’m looking forward to read it through. Is this defined as censorship or freedom of owner’s will on your blog? Wondering…

        1. I generally allow links, particularly to 3rd party articles if I have the time to vet them and think they are useful to further the conversation. I tend to edit out links of obvious self promotion or if they look suspicious. So I elected to edit that out of his comment, b/c I was short on time and not able to vet it. Sorry if it was legit and helpful. I don’t have a way to go back and find it.



    1. I actually just got a library notification to come pick up that book that they pulled for me. I listened to his interview with Peter Attia this past weekend, which prompted me to pick it up.

      Looking forward to reading it a little more based on your feedback and recommendation.



  3. Chris, I appreciate very much the philosophical perspectives you’ve offered here. But I would like to ask a more practical question if I may. I am approaching 72, and for the life of me I do not know the difference between setting a SWR and how that relates to my required minimum distributions (RMD). Perhaps you can write a post someday that will explain the relationship between the two. A simplistic question I have is this: what if my RMDs exceed my desired SWR? Thanks so much for any insight you can offer.

    1. Tom,

      I appreciate the question, as it helps me to better understand what readers are struggling with. I promise you if you don’t understand this, others don’t as well. I will address your question in a future post.


        1. Tom, just so you don’t have to wait till Cris writes and posts his blog article on the subject, I can offer the consensus of most financial planners. The RMD calculations are basically intended to make sure the IRS gets taxes on your tax deferred accounts within an “average” lifespan. Since they are based on both your age and the ending balance each year, they can also vary quite a bit with swings in the market (depending on your portfolio allocation). In addition, RMD requirements DO NOT require you to sell anything, or spend any money, only to transfer shares or funds into a taxable account and pay taxes on that “income” since it is part of your AGI. Yo
          U can always transfer the shares from the tax deferred accounts to a taxable brokerage and keep it invested, and when you do sell it you’ll pay capital gains tax on the difference between the value when you transferred it out of the deferred accounts and the value when you sell it. A SWR, however, is usually intended to be relatively stable over your lifetime, and adjust each year for inflation, and is tested against historic data to reflect a level of success in dealing with inflation and sequence of returns risk. There are some withdrawal strategies that do factor in your portfolio balance at given intervals, but I’m sure Chris will mention some of those in his post on the subject. There are also withdrawal strategies that use the RMD as the yearly withdrawal amount, but most peopl are looking for a strategy that gives them a more consistent amount to spend, and the RMD amounts have a really steep trajectory in the later years, so that’s another reason peopl prefer a SWR.

          1. Thank you, Bruce,
            RMD time is still years away for me, but I always plan early. It hadn’t yet occurred to me that I could transfer the RMD to a taxable account that remained invested. Additionally, if my tax bracket is low enough, some of it could go into a Roth as a conversion?

            I look forward to Chris exploring this topic

  4. *non-financial comment below*

    I love seeing all of us us when we were young. It shows me we really aren’t all that different from one another.

  5. This is the sentence that resonated with me:

    “Many times we embrace the second half of life concepts after a major life event, be it positive or traumatic.”

    I had a heart attack in July of 2021. I’ve been reading about FIRE since at least 2010 and started maxing out my retirement accounts in 2012 after going through a divorce. I’ve always liked the idea of retiring early but for me, this meant maybe at 62. Well, in the last year I decided to push this up and the heart attack was the impetus. I’m 59, turning 60 in January, and I’m retiring at the end of April, 2023. This major life event also got me on a health kick. I’m eating healthier and I have lost over 30 pounds since then. I’ve also been working out religiously for the longest period in my life.

    I’ve been doing all the calculations, I’ve used a few retirement calculators, and I got second opinions. The numbers are close but give me good odds. Could I use more money? Of course. It would make the decision easier but I have decided that enough is enough. I will make it work by making adjustments along the way. I look forward to the challenge of doing what I want to do with the rest of my life and making my nest egg last. I’m making more income than ever and I like my job and co-workers but I think the chances that I will wish that I had worked a couple more years are very slim.

    1. Thanks for taking the time to share your feedback and experience Steve.

      I’m sorry that it took a heart attack to change your behavior around health issues and mindset around money and priorities. I don’t think that is at all uncommon based on my observations. The important thing is that you did make those changes. Unfortunately many people never do.

      Best wishes going forward!


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