Retirement Planning
The 25X Retirement Planning Rule
A simple formula to target your journey
Published in
Sep 5, 2022
Retirement planning can be a daunting task. So much so that most people never even start. When the timeline can seem so far away or the hill too difficult to climb, many people will stay on the sidelines.
To set a target, plan for 25 times your expected expenses during retirement. We’ll use $67,521 per year since it is the average household income. Therefore, you will need to save $1.69M. Once you saved that much, you can retire and take 4% from your savings every year (4% of $1.69M = $67,600).
If you can get into a habit of investing $500 per month in an index fund starting at 21 years old, you will achieve $1.71M by your 65th birthday (using 7% for stock market growth).
Time is your greatest asset.
