The Real Retirement Income Goal

How much do I need to retire?

If you ask me, I’d say I have no idea what you need and neither does anyone else. $1,000,000 is often thrown around as the goal, but that means you will live in retirement on roughly $40,000 a year (plus SS). Is that good enough for you? Maybe, maybe not.

Conventional wisdom in retirement planning tends to focus on building a nest egg from which you will draw during retirement. That’s a big part of the goal, you certainly need a pile of money to take you through retirement, but what you also need and the way to think about retirement income planning is an income stream.

For those relatively few of us who have a pension and Social Security knowing money will show up in the bank every month no matter what the stock market does makes for less financial stress. For the great majority of Americans replicating that type of income stream should be the primary goal.

That means several different sources of retirement income that are as guaranteed as possible.

When we think of saving for retirement, we tend to think 401k) or IRA. Those are tax-favored plans, and you may receive an employer match which is important, but they should not be your only source of retirement income. On the road to retirement you need to consider other investments as well. That includes interest and dividends, perhaps an annuity.

Let’s be clear, all this is relevant to your income, you do not have to be rich to own stocks or bonds. What you are trying to do is assure a retirement income consistent with your lifestyle before retirement be that an income of $40,000 a year or $400,000.

It takes time, it takes years, it takes small, but consistent steps.


  1. The amount of income from savings and investments in retirement is usually not sufficient for all but probably the top quintile of earners and those with pensions.

    Social Security is very important to many retirees and must be dealt with carefully so as to get the highest benefit the retiree can.


    1. It is the job of all Americans except perhaps the lowest 15-20% income wise to make sure over their lifetime that their investments together with SS can sustain the lifestyle they desire. To do that may mean some sacrifice during working years something it appears many people are not willing to do.


      1. True and the reason I say social security is so important is that according to an SSA fact sheet at, 37% of men and 42% of women depend on social security for 50% or more of their income. That tells me that working to full retirement age and delaying taking benefits as long as possible is a good bet to help a lot of folks.


      2. People that will not make some sacrifice during their working years, will definitely have to make those sacrifices during their retirement years. I only made $320,000 during 27 years of work from 1971 to 2006. I now have $40,000 per year in retirement benefits, Social Security and Military pension. You can do the math, I never had any extra to save. Living low income will force you to question every purchase. Over my life time I learned how to do car repair / maintenance, plumbing, electrical and carpentry, that has saved me thousands of dollars. I just installed a new kitchen faucet for $32 off EBay and it looks better than the $110 faucet at Wal-Mart No matter what the total balance of your accounts in retirement, no credit card debt or house payment will go a long way in making your retirement years stress free.


  2. Hola Fellow Quinners! I beg to disagree on the statement about 401-K and/or IRA accounts not being sufficient for a retirement plan,,,If you are able to accumulate enough assets in either and/or both of those vehicles, they should suffice. You could end-up with $550 – $1000K in those accounts, so why would you need any other forms of investments/assets to supplement your retirement? And, you typically have plenty of diversification in those vehicles also…401-Ks and IRA’s should be sufficient, as long as you contributing enough into them, espoecially when you are getting 25-50-100% matches from your employer…


    1. I think you need to step back and take a broader view. It’s not the amount that’s in your 401k it’s what you need to generate income sufficient to maintain your lifestyle throughout retirement years. If you earned $35,000 a year while working $550,000 may be sufficient. If you earn $80,000 it won’t come close.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s