Question 1

How much do I need to retire?

Accepted Answer

A common rule of thumb is to save 25× your desired annual retirement income (the 4% rule). If you need $60,000/year, you need $1.5 million. This assumes a 4% annual withdrawal rate, which historically sustains a portfolio for 30+ years.

Question 2

What is the 4% rule?

Accepted Answer

The 4% rule states that you can withdraw 4% of your retirement portfolio in the first year, then adjust for inflation each year, and your money should last at least 30 years. Based on historical market returns, this has held up in most scenarios since 1926.

Question 3

How much should I save for retirement each month?

Accepted Answer

A common guideline is to save 10–15% of your gross income for retirement. If you're starting late, you may need to save 20–25%. The earlier you start, the less you need to save monthly thanks to compound growth.

Question 4

What is the best retirement account — 401(k) or IRA?

Accepted Answer

Both are valuable. A 401(k) has higher contribution limits ($23,000 in 2024) and may offer employer matching (free money). An IRA ($7,000 limit) offers more investment choices. Ideally, contribute enough to get your full employer match first, then max an IRA, then contribute more to the 401(k).

Question 5

What average return should I use for retirement projections?

Accepted Answer

A commonly used figure is 7% annually for a diversified stock portfolio (historical S&P 500 average after inflation). For a mixed portfolio (60% stocks, 40% bonds), 5–6% is more conservative. Always plan conservatively — it's better to be pleasantly surprised.

Question 6

How does inflation affect my retirement savings?

Accepted Answer

Inflation erodes purchasing power over time. At 3% annual inflation, $1 today will only buy about $0.55 worth of goods in 20 years. This calculator shows your inflation-adjusted nest egg so you can see what your savings are really worth in today's dollars.

Question 7

When can I start taking Social Security?

Accepted Answer

You can start Social Security at 62 (reduced benefit), full retirement age (66–67 depending on birth year), or up to 70 (maximum benefit). Delaying from 62 to 70 can increase your monthly benefit by up to 77%. Factor Social Security into your total retirement income plan.

Question 8

What is a safe withdrawal rate?

Accepted Answer

The 4% rule is the most cited safe withdrawal rate, but some financial planners now recommend 3–3.5% for longer retirements (30+ years) or uncertain markets. A lower withdrawal rate means you need a larger nest egg but your money is more likely to last.

Question 9

Should I use a Roth or traditional 401(k)/IRA?

Accepted Answer

Traditional accounts give you a tax deduction now but withdrawals are taxed. Roth accounts are funded with after-tax money but grow and withdraw tax-free. If you expect to be in a higher tax bracket in retirement, Roth is better. If lower, traditional is better. Many people benefit from having both.

Question 10

What happens if I outlive my retirement savings?

Accepted Answer

This is called longevity risk. To reduce it: use a conservative withdrawal rate (3–4%), keep some equity exposure in retirement, delay Social Security to maximize that guaranteed income, consider an annuity for a portion of savings, and plan for a 30+ year retirement if you retire at 65.

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