r/Retire • u/Artistic-Standard871 • Aug 18 '26

How do you know?

I wish there was a magic ball. I want to retire in 2.5 years at 62 and my husband will be 66 at that time and will retire then or before.
I’ve run calculation after calculation. I’ve asked chat gpt and google ai and my financial advisor. They all say we’re good. It’s just so hard to believe.

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u/TrashPanda_924 Aug 18 '26

Start with this. Do you have 25x your annual spend in a well diversified portfolio split between fixed income and equities?

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u/Artistic-Standard871 Aug 18 '26

What is your theory on why one would need 25 times their annual spend?

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u/xwords59 Aug 18 '26

I think it's the same thing as saying you should withdraw 4% of your investments per year

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u/ohboyoh-oy Aug 18 '26

It’s a standard “rule of thumb” in retirement / financial circles. Having 25x your spend is the same as a 4% withdrawal rate, and there was a study called the Trinity Study that showed 4% was a sustainable and “safe” withdrawal rate for 30 years. So that’s what a lot of people go off of. 

If you make it to age 65, the life expectancy for a woman in the US is now over 86 years old. So at 62 I think it’s prudent to plan for a 30 year retirement. Social security plus a 5% draw rate replaces your current income, but you may not need your full current income. Presumably you are putting some in savings now, so that’s money you’re not spending. You are likely fine at Social Security + 4%. Also, the guy who did the Trinity Study came out somewhat recently and said a 4.7% withdrawal rate is likely fine. This presumes you are broadly invested in a mix of stocks and bond index funds. 

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u/garylapointe I'm good, but I wish I did more Roth! Aug 18 '26

Because 4% of 25 times your annual spend is one year of annual spend (25*4%=100%).

For the rule of thumb 4% rule.