Retirement Savings: Why the '10X Your Salary' Rule Might Not Fit You

Everyone’s talking about saving 10 times your annual salary for retirement. But here’s the thing — that number is pretty meaningless if it doesn’t match your actual lifestyle.

Instead of fixating on salary multiples, figure out what you actually need to spend annually in retirement. Like, will you travel? Spend more on healthcare? Less on commuting? That matters way more than some generic benchmark.

The Math That Actually Works

Once you know your target income (say, $50k/year), use the 4% rule: multiply it by 25. So $50k × 25 = $1.25M nest egg needed. On a $1.25M portfolio, you’d safely withdraw about $50k annually without running out of money.

One Income Stream Isn’t Enough

Here’s what people miss: retirement income shouldn’t come from just your savings. Stack multiple sources:

• Social Security benefits
• Dividend income
• Annuities or pensions
• Strategic portfolio withdrawals

This drastically reduces how much you actually need saved.

The 10% Savings Myth

Saving 10% of your salary sounds reasonable until you do the math. Start in your 40s? That’s way too little. Start in your 20s? Still might be tight depending on your goals. The real number depends on when you start and how you invest it.

Stock market index funds (low-fee, diversified) historically outpace inflation better than most alternatives. Your age, risk tolerance, and timeline matter way more than following someone else’s percentage.

Bottom line: Stop comparing your retirement plan to others. Calculate your number, diversify your income sources, and invest smartly. That’s the actual strategy.