If your target retirement income is $50K/yr in today’s dollars and you plan to retire in 20 years, you’ll need an income of $90K in your 1st year of retirement (PV=50K, I=3% inflation rate, n=20 yrs).

But, of course, it doesn’t stop there because for each year of retirement, you’ll need to draw increasing amounts to keep up with inflation. After 20 years of retirement, you’ll need income of $162K to maintain the same purchasing power.

I find that assumptions for timing, like when you’ll retire and when you’ll die (or last to die), plus assumptions for inflation and investment returns vastly affect the calculation of how much you’ll need.

If you figure these things conservatively, you end up with results that suggest you’ll need millions of dollars. But if you calc it too simplistically, there are all kinds of variables (like future tax rates), you end up ignoring critical items.

I’ve concluded there is no fool-proof way to go about it. Reality is that we are going to have to count on a whole lot of uncertainty about our future and retirement. And reality is that most people will end up relying on family to help bridge the gap in some way, shape or form. And as much as I think people should be as prepared as possible, there is no avoiding the role of fate – some of us will be fortunate in our health, investing, planning, etc. and some of us won’t be, no matter how diligently we try.

So, my strategy is to try to leave as many future options open as possible – flexibility to work as long as possible, and save as much as possible, as well as contingency just in case it doesn’t work out the way I envision it will.

My plan that I have spreadsheeted is to target spending about half of the $2 million over a fairly long but realistic 30 or 35 year time period (in addition to the income from the balance). Using assumptions of a 5% return and 3% inflation, this would allow me to withdraw $6600 per month INCREASING OVER TIME FOR INFLATION and be left with $1 million after 30 years. By increasing in time for inflation, I mean that it wouldn’t be a flat $6600 every month, but a little more than that each month so that my net earning power would remain $6600 per month, or about $80,000 per year (i.e. I would be drawing about $9000 per month in 10 years). This doesn’t factor in taxes and social security. I am pretty comfortable with this plan. The only catch of course is getting that $2 million

If you adopt this mindset you almost certainly will be able to retire comfortably or at least without a major lifestyle adjustment

I’ve known for awhile that my wife and I will need more than $1M to retire, but I am fine with that. I am still going toward the goal of $1M though, because as you said, it has a nice ring to it.