• Jeremy Ellisor

Calculate Your Retirement Number

How much do I need to save for retirement? This is one of the questions I am asked most frequently. To answer that question, we need to look at the two phases of investing…

The first phase is called the accumulation side. This is when we’re working, saving, and investing; ultimately, to get to the top of the mountain to retirement. Then, we transition into the second phase, which is called distribution. This is when we’re no longer working; we’re in our retirement years. We’re not saving, but we’re using our portfolio to meet our income needs.

As a rule of thumb, you want to you limit the amount that you take out of your portfolio every year to 3-6%. If you’re close to 3%, it’s likely that your portfolio will continue to grow over time. If you’re closer to 6%, it’s likely that your portfolio will go down over time. A good, safe number to use is 4%.

If your current income level is $100,000 we would assume that you would want to keep that during retirement. So, if we are trying to calculate the amount of money that we need in our portfolio at retirement, we would take $100,000 and use our 4% withdrawal rate and we would calculate that we would need $2.5 million in portfolio assets.

Once we’ve done that, we can calculate what type of savings rate plus rate of return (ROR) that we need to meet our retirement goals. So basically this is how it works.

The complexities come from factors such as inflation. The number I used of $100,000 could easily be $200,000 30 years from now. What about tax rates? When you get to the distribution side, are they going to be different? Social Security… for those of us on the accumulation side, is Social Security going to be here?

If you need some help answering all of these questions, schedule an introduction meeting or phone call. The consultation is free, and we believe that you can achieve anything with intentional planning, some encouragement, and taking some small steps along the way.


is a Registered Investment Advisor serving clients across the United States. We are proud to have been voted the best or among the best financial planners in Charleston and Mount Pleasant since we first opened our doors.


3850 Bessemer Road

Mount Pleasant, SC 29466

(843) 972-4402


(Your information stays safe with us.)

© Copyright Convergent Financial Group 2020