Here’s How Much You Need To Retire With a Modest $50K Lifestyle

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Regardless of whether you’re a soon-to-be retiree or you have decades until retirement, the question of how much you need to save can be overwhelming. Staring at the likely need of over $1 million to retire feels like a big number, and it is.

Reframing the need can be helpful if you focus on the kind of lifestyle you want in retirement. A modest $50,000 lifestyle, for example, affords you room to enjoy life without skimping on everything.

Here’s how much you need to retire with a $50,000 budget.

What Does a $50,000 Retirement Lifestyle Look Like?

A $50,000 lifestyle isn’t the same as your working salary. Instead, the $50,000 is what you spend and live on. Several factors can directly influence how far this $50,000 will go each year, most notably the cost of living where you live and whether you still have a mortgage.

Living in a more affordable location and having no mortgage can stretch your budget, giving you more freedom to do things you enjoy, such as travel. It’s also important to remember that the $50,000 is in today’s dollars. Inflation will require a higher dollar figure in future years. Don’t overlook health care costs either. The average 65-year-old can expect to spend $172,500 on health care needs in retirement, according to Fidelity.

Read More: Retirement Net Worth: How Your Savings Compare to the Average Retiree

Find Out: 5 Clever Ways Retirees Are Earning Up To $1K per Month From Home

How Big of a Nest Egg Do You Need for a $50,000 Lifestyle in Retirement?

Using the 4% rule is a helpful way to determine how much you need to retire to maintain a $50,000 lifestyle. The 4% safe withdrawal rate means you withdraw 4% of your total portfolio in the first year of retirement and adjust it annually to account for inflation, according to Schwab.

If you follow the rule, you will need at least $1.25 million in retirement savings. These funds should be in a diversified portfolio, assuming you will live 25 to 30 years in retirement. For more conservative people, you can use a 3.5% withdrawal rate, which would require up to $1.5 million in retirement savings.

Regardless of which you choose, it’s not a guarantee. Returns, inflation and longevity all impact the number. Speaking with a trusted financial advisor can help you formulate a plan.

Does Social Security Impact Your Target?

For retirees unable to accumulate $1 million or more in retirement savings, it’s key not to overlook Social Security. Monthly payments can help cover some of your needs in retirement.

If you believe you’ll receive $20,000 annually from Social Security, that means you only need to cover $30,000 annually from your savings. Using the 4% rule, that reduces the need for a $1.25 million portfolio to $750,000.

Keep in mind, though, that Social Security is projected to become insolvent as early as 2032, according to the Tax Policy Center. Consulting with a financial advisor can help you determine the role Social Security plays in your planning needs. 

Factors That Can Increase or Decrease Your Number

Retirement living isn’t a one-size-fits-all approach. Each person’s situation is unique, which can affect how much you need to save. Working longer, for example, reduces the number of years your savings must cover and can increase Social Security payouts.

Debt and housing can also directly influence expenses in retirement. Eliminating high-interest debt and downsizing can significantly reduce your spending, freeing up more resources for retirement living. Being flexible about where you live and avoiding debt can directly influence how much you need to save.

Retirement is a time to enjoy life. Having a $50,000 lifestyle in retirement is possible with wise planning. Pulling certain levers in your planning can free up more of those funds to do what you want in retirement.

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