Ramit SethiRamit Sethi: The No-BS Guide to Living a Rich Life

How Much Money Do You Need to Retire?

1 Jul 2024 · 1 min

Watch on YouTube

0:44

A short YouTube talk by Ramit Sethi explaining how to estimate a retirement nest egg using the 4% safe-withdrawal rule. He cites that the average American thinks they need $1.46M, defines the 4% rule (withdraw 4% yearly for 30 years), and gives a worked example: $73,000 annual spending → $1.825M target.

Questions this video answers

$1.46 million

You can safely withdraw 4% of your savings each year for a period of 30 years.

$73,000 per year

$1.825 million (calculated as $73,000 ÷ 0.04)

Chapters

How much do you really want to retire with? And how much do you need? According to a recent study, the average American believes they need $1.46 million in the bank to retire comfortably. How do we get the real numbers? We need to talk about something called the 4% rule. The 4% rule means you should be able to safely withdraw and live off of 4% of your savings each year for a period of 30 years. When you retire from first, find out how much you spend every year, including rent or a mortgage, utilities, groceries, gas, et cetera. But I'll use $73,000 just to make it simple. So 73,000 divided by 0.04 means that you need 1.825 million to retire comfortably.