Retirement April 7, 2016

    To help evaluate whether you'll have the money to maintain your desired standard of living in retirement, here's a quick overview.

    1. How much will you need every year?

    While some expenses may go down after you've retired (mortgage, career-related expenses), others may go up (travel, healthcare). To be on the safe side, assume you'll need about the same annual income minus what you're saving for retirement.

    2. How much income will come from your portfolio versus other sources?

    Once you determine how much you'll spend in retirement each year, compare it to the amount you'll receive from Social Security, pensions, rentals or other regular income sources. If you, like most retirees, find that your non-portfolio income won't cover your spending, your portfolio will need to generate the difference. After all, that's what you saved for!

    Estimated portfolio income

    3. How much should you estimate you need to save in order to support that yearly income?

    annual income times 25

    If your portfolio is roughly 25 times the amount you withdraw in the first year of retirement, you can feel confident that your savings will last 30 years, assuming you give yourself a pay raise every year with inflation and don't make other adjustments.1

    4. Adjust as necessary

    If you find that your current vision for retirement is not in sync with your savings, you have a few options. For instance, you might:

    • Retire later
    • Spend less
    • Work part time in retirement

    How Schwab Intelligent Portfolios® Goal Tracker Can Help

    Goal Tracker can help you set up an income goal and monitor your progress. Log into your Schwab Intelligent Portfolios account and click on the Goal tab to access Goal Tracker.

    1. Schwab Center for Financial Research. The information provided here is for informational purposes only based on general guidelines for income distribution, and should not be considered an individualized recommendation. It is recommended that investors use a retirement plan calculator with Monte Carlo simulations for a more refined, customized estimate.

    This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Charles Schwab & Co., Inc. (“Schwab”) recommends consultation with a qualified tax advisor, CPA, financial planner or investment manager.

    There is no guarantee that the intended goal will be reached and changes to inputs and other assumptions may affect your potential to reach the intended goal. In addition, the projections and other information you will see here about the likelihood of various outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. The projections are based on estimates intended to be representative of the selected portfolio. The output of this tool may vary with each use and over time. The tool does not consider the specific securities or other assets held by you. This tool provides analysis based upon your inputs but makes additional assumptions detailed in the Goal Tracker white paper.


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