# How much money do you need to retire if you expect to spend 2500 per month starting at age 67?

"How much money do you need to retire if you expect to spend 2500 per month starting at age 67?"

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This is not as easy a question to answer as it may seem, because there are 3 somewhat fixed variables and several intangible ones:

Fixed variables:

(1) How long will the monthly funding be needed for (i.e., how long do you plan on living?).

(2) What is the rate of return the invested funds are assumed to earn?

(3) Do you want any money left at the end of the run (i.e., for your estate), or will it be depleted to a zero balance?

Intangible variables:

(4) What is your risk tolerance?

This is important because it directly impacts the answer to #2 above. The more 'guaranteed' the money, the lower the rate of return, and the more one will need to generate $2,500 per month.

(5) What is the time between now and retirement age?

It sounds like there is a period of time between now and age 67 for the person writing this question

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All that said, here are two calculations made with the following assumptions:

Calculation A:

Age 67, will live to age 100 (33 years).

Needs $2,500 per month during this time.

Assume a 6% rate of return.

Remaining value is zero at age 100.

Given the assumptions listed above, in order to generate $2,500 per month from age 67 to 100, one needs to have $430,623 to invest (at the starting age of 67).

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Calculation B:

Same assumptions as in 'A' above, but with $100,000 still remaining at age 100.

Given the slightly revised assumptions listed for 'Calculation B,' one needs to have $444,499 to invest at age 67 in order to generate $2,500 per month until age 100.

This is an important comparison because it demonstrates the time-value of money, and how a relatively little bit more invested now will grow to become a sizable difference at the end of the period.

In tangible retirement planning terms, this means one either (a) has an estate of $100,000 to pass along at death, or (b) always has a cushion of at least $100,000 come what may -- even if one lives for some time past age 100.