Doing retirement planning is challenging because you have to figure out how much income you'll earn from your savings. But how can you make a good estimate?
In the following video from our Retirement Q&A series, Dan Caplinger, The Motley Fool's director of investment planning, answers a question from Fool reader Rick about how to figure out what your retirement income will be. Dan notes that the usual rule is that you can take 4% of your retirement nest egg each year, pointing out that it doesn't necessarily have to be "income" but rather can come from spending down principal. But Dan points out that this calculation doesn't include Social Security, employee pensions, or other sources of regular monthly income beyond your investments. To come up with the right figure, you have to add in all your income sources, but when you do, you'll have a good sense of what you can expect to spend by using the 4% rule.
How to get even more income during retirement
Social Security plays a key role in your retirement financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.
Have general questions about Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!
Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.