- Ref:: Investing Made Simple
- Title:: Retirement target
- Author:: Mike Piper
- Year of publication:: 2018
- Category:: Book
- Topic:: #topic.investment
Notes from reading
how to calculate the amount of money they’ll need to have saved up before they can retire?
- Determine Your Spending Needs
- how much you will have to withdraw from your portfolio each year during retirement
- Multiply by 25
- We multiply by 25 because multiple studies have shown that, based on historical U.S. market returns, a starting withdrawal rate of more than 4% per year has led to an undesirably high likelihood of running out of money over the course of a 30-year retirement. Therefore, you’ll want to ensure that your portfolio is at least 25-times (that is, 1 ÷ 4%) the amount that you expect to have to withdraw each year.
Asset Allocation and Risk Tolerance
The primary factors determining your risk tolerance are:
- The degree of flexibility you have with regard to your financial goals, and
- Your personal comfort level with volatility in your portfolio.