Day 23 of 28 Days Richer
One thing each day that puts money in your pocket and takes 5 minutes or less.
Here’s how to work out exactly how much you need to retire.
Takes two minutes and gives you a concrete target to aim for.
It’s called the Rule of 25.
The Formula
Take what you want to live on each year in retirement.
Multiply it by 25.
That’s your number.
Want £30,000 a year? You need £750,000.
Want £40,000 a year? You need £1,000,000.
Want £50,000 a year? You need £1,250,000.
Why It Works
The Rule of 25 is based on the 4% safe withdrawal rate.
Research shows that if you withdraw 4% of your portfolio each year, adjusted for inflation, your money should last 30+ years.
Multiply your annual spending by 25 and you get the pot size that supports 4% withdrawals.
Today’s 5-Minute Action
Work out your number right now.
What would you want to live on each year in retirement?
Multiply by 25. Write it down.
Then compare it to what you’re currently on track for.
Check your pension projections, add up your investments.
If there’s a gap, you’ve got time to close it.
Putting It in Perspective
£1,000,000 sounds impossible?
At £500 per month with 7% average returns, you’d reach it in about 35 years.
Start at 30 and you’re a millionaire by 65.
The number feels huge until you break it down into monthly contributions.
Knowing the target is step one.
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