Couples need between $650,000 and $860,000 in savings to remain financially independent in retirement, according to a new article from Motley Fool reporter Ryan Downey.
Downey says the median retired couple has annual income of $57,000, $31,000 of which comes from Social Security. Investment income must cover the $26,000 gap. “To stay within 4 percent rule guidelines, that necessitates between $650,000 and $860,000 in retirement savings (and that’s just to maintain a median income, assuming no taxation). That number will also be higher for people retiring in the future, due to inflation,” he adds.
Downey further recommended that couples:
- Accumulate at least $300,000 in assets to cover healthcare costs in retirement;
- Retain some exposure to stocks so that the value of their investment portfolio keeps pace with inflation;
- Recognize that proceeds from IRAs and 401(k)s will be taxed. Tax rates vary by state and change over time, but it’s common for retirees to have effective income tax rates of 10 to 15 percent; and
- Plan for more than 20 years of retirement.
