How Much Do I Need to Retire?

Written By David Rakecky

How Much Do I Need to Retire? (A Straightforward Guide for Grosse Pointe Families)

If there’s one question I hear more than anything else, it’s this one:
“How much do I actually need to retire?”

People expect me to say something complicated, like:
“Well… it depends…”

But the truth is, you can get a very good estimate with a simple, reliable formula — one that works especially well for people who want a comfortable, predictable retirement without overcomplicating things.

Let’s walk through it in plain English.

The Fastest Way to Estimate Your Number

Here’s the cleanest, most practical rule of thumb I’ve ever seen:

👉 Take the annual income you want in retirement and multiply it by 20.

That’s it.

If you want:

  • $120,000 a year → target portfolio of $2.4M

  • $200,000 a year → target portfolio of $4M

  • $150,000 a year → target portfolio of $3M

This math comes from the distribution strategy I use with Grosse Pointe families every day — an approach designed to weather good markets, bad markets, weird markets, and everything in between.

It’s simple, but it’s shockingly accurate.

Why Our Strategy Works Better Than the Old “4% Rule”

You’ve probably heard of the 4% rule:

  • You withdraw 4% of your portfolio each year

  • Supposedly it lasts for 30 years

But here’s the part nobody talks about:
It works in some market environments and completely fails in others.

The 4% rule was built on old bond yields, low inflation, and market cycles that don’t look anything like today’s.

The 20× method solves this by backing into an income target that works with modern withdrawal strategies and guardrails — not some outdated academic model from 1994.

Factor in Your “Guaranteed Income”

This is where a lot of people overestimate how much they actually need.

Your portfolio doesn’t have to carry the full weight of your lifestyle.
You can subtract anything that already brings in income:

  • Social Security

  • Pension income

  • Annuities

  • Rental income

Example:

You want $150,000/year in retirement.
Your Social Security + pension = $50,000/year.

Your portfolio only needs to produce the remaining $100,000/year.

$100,000 × 20 = $2M needed.

That’s a completely different picture than thinking you need $3–4 million.

What If Markets Are Bad in My Early Retirement Years?

This is where sequence-of-returns risk comes in — and it’s the #1 reason some retirees run out of money.

Here’s the blunt truth:

A bad first 5–7 years of retirement is more dangerous than bad markets later.

That’s why I use the guardrails approach with clients instead of fixed-withdrawal strategies.
It’s flexible in the right ways:

  • No drastic lifestyle changes

  • No panic selling

  • No “just hope the market recovers”

It adjusts income slightly based on market conditions, which dramatically increases the probability that your money lasts your entire life.

So… How Much Do You Need?

You don’t need to guess.
You don’t need to dig through spreadsheets.
You definitely don’t need to run 50 Monte Carlo simulations at home.

I built a tool that does the math instantly:

👉 Use my free retirement income calculator (no email / no login)

https://www.tetrawealth.net/calculator

You can either:

  • enter your portfolio size → get your estimated income, or

  • enter your desired income → get the estimated portfolio amount needed

It’s simple, fast, and exactly what I use with clients.

Final Thoughts

Most people overestimate how complicated retirement planning needs to be.
The truth is, once you understand:

  • the income you want

  • your guaranteed income sources

  • and the simple 20× rule

…you’re already 80% of the way to clarity.

If you’re within 5–10 years of retirement and want a real-life walkthrough of your numbers, you can also schedule a short Compass Call — it’s 15 minutes, and no pressure.

👉 Schedule here: https://www.tetrawealth.net/compasscall

David Rakecky