How Much Money Do I Need to Retire

The answer to the question of how much money is needed to retire may vary from one person to another. In answering the question, the current age of the person, the age by which the person intends to retire, the person's retirement lifestyle, and the current and future economic status have to be considered to really know how much money a person would need for retirement.

Some experts advise that in order to retire comfortably, a person should have saved at least 70% of his or her annual income. Therefore, if a person's annual income is $50,000, he or she should have at least $35,000 every year during the retirement period to be ensured of a comfortable life.

During the retirement period, the person may expect that the expenses will be lowered because there will be less lunch outs, no driving to work and no business and work-related expenses.

To approximate the amount that a person would need during the retirement, a person may multiply his or her annual income with 70% and multiply the result with the number of years the person is expected to live during the retirement. If the person will retire at 65 and expects to live till 90, this would mean having enough money to spend for 25 years of retirement. If the person's annual income is at $50,000, the person would need $35,000 every year for 25 years. The person would need $875,000 in order to live comfortably during his or her retirement stage.