Americans often think they need $1.5 million to retire, enjoying things like golf trips and fancy cars.
But Kevin O’Leary from “Shark Tank” says you can retire with just $500,000. This is different from the $5 million he suggested last August.
Mr. Wonderful believes the key is to invest wisely and maybe spend less once you retire.
How much you need depends on the lifestyle you want. Research from Northwestern Mutual shows most Americans think they need nearly $1.5 million to retire, up 53% since 2020 and 15% from last year.
O’Leary says you can earn about 5% with low-risk investments, giving you $25,000 per year with $500,000. If you invest in stocks, you could earn up to 9%, or $45,000 per year.
For a secure retirement, people often use the 4% rule. This means you can withdraw 4% of your savings each year for 30 years, adjusting for inflation.
Financial adviser Bill Bengen developed this rule based on historical data to help retirees not run out of money.
The average retiree over 65 spends about $52,141 annually. Using the 4% rule, you’d need at least $1.3 million saved to spend $53,000 per year. If you had $500,000 saved, you could safely spend $20,000 per year.
No matter how much you have saved for retirement, talking to a financial adviser can help you reach your goals.
They can give you advice that fits your situation, dreams, and how much risk you can handle.