Want to retire in 2026 and spend $10,000/month without stressing about the US economy? Here’s how much you need

Core Insights - The 4% rule has been a long-standing guideline for retirement planning, suggesting that retirees can withdraw 4% of their savings annually without depleting their funds [1] - This rule is based on historical stock market returns but does not account for the sequence of returns risk, which can significantly impact retirement savings [2] Sequence of Returns Risk - Sequence of returns risk is described as a critical issue for retirees, where a market downturn early in retirement can lead to reduced capital for future withdrawals [3] - If a retiree experiences a market decline shortly after retiring, the withdrawals made during this downturn can permanently diminish their portfolio [4] Impact of Market Downturns - An example illustrates that retiring with $3 million and withdrawing 4% annually can lead to a significant loss if the market declines by 20% in the first year, reducing the portfolio to $2.28 million after withdrawals [4] - Even with a subsequent average return of 7%, the portfolio may still be worth only $2.75 million after ten years, indicating the long-term impact of early losses [5] Mitigation Strategies - There are strategies available to minimize the sequence of returns risk, allowing retirees to withdraw funds without being overly affected by market fluctuations [6]