While the answer to that question will differ for each of us, there is a handy tool that may be useful to determine just how much you need and how much you can comfortably spend each month in retirement. This is the T. Rowe Price Retirement Income Calculator. Available at the T. Rowe Price website at www.troweprice.com, it is easy to use and gives a comprehensive look at your particular financial situation.
You can use the calculator even if you are not a T. Rowe Price shareholder. You simply register as a guest and then provide the required information. This includes the amounts in your and your partner's IRA, 401K as well as the amounts you anticipate (or are receiving, if already retired) receiving from Social Security, pensions, annuities and any other sources of income. You also are required to provide your monthly budget, i.e., how much you spend each month.
Once you have provided the requested information, the calculator goes to work, performing what are said to be thousands of calculations to determine if you will run out of money before you are 95 years old. You are then provided with a readout showing the percentage likelihood as to whether you have enough. Anything over 90% is considered excellent. Below that, you might want to consider saving more. In addition to the percentage likelihood of reaching 95 with enough money, it also shows you how much you can safely expect to spend each month.
This calculator is the best and easiest to use that I have seen. One note of disclaimer, I do own shares in various T. Rowe Price funds but I have no other financial interest in the firm, nor have I been compensated in any way for these views, which are strictly my own. -
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