25x Rule: To support a 30-year retirement, you'll need savings of at least 25 times your annual retirement expenses. This rule is often used in conjunction with the 4% withdrawal rule, which suggests withdrawing 4% of your retirement savings in the first year and adjusting for inflation annually.
- For example, if you anticipate needing $100,000 per year from your savings, the 25x rule suggests you'll need to save $2.5 million ($100,000 * 25). However, this doesn't account for other income sources like Social Security or pensions. If you receive $24,000 annually from Social Security, you'd only need to generate $76,000 from savings, requiring $1.9 million ($76,000 / 0.04).
