Originally Posted by ks55

How much do you think it is enough to retire comfortably, normal living, subsistence living or mere surviving? Well, it is up to individual.
If you can afford to spend a million dollar a year, you live like a king.
If you can afford 100k a year, you live a normal life.
If you can only foot out 12k a year, you may have to work till the end of your world.
Quality of your retirement life really depends on how much you have saved, and it is not so complex as so many people think.

There is a simple way to gauge your financial standing at your retirement on how much you can afford to spend with the following assumptions:-
1. You have a mortgage free house/apartment.
2. You can generate 10% income (tax free) a year from your nest eggs.
3. Inflation is at 4% and below.
4. You are living(or surviving) with your nest eggs through your life span with adjusted inflation rate of 4%, and without eating into your nest eggs.

So, how much do you think you can spend (X) every year if you have 1 million at the beginning of your retirement?

Here is the magic formula :-

1000k = X/(0.1-0.04)
or X = 0.06 x 1000k
= 60k
i.e. You can spend up to 5k a month through life plus adjusted inflation of 4% a year.

If you have 2 million, you can spend up to 10k a month etc.

What happen if you can only generate 8% tax free income on your nest eggs?
The amount (X) you can spend will be:-
X = 0.04 x 1000k
= 40k

Your problem will be:
Can I earn 10% a year? 8% a year?
It is achievable. Please consult your financial planner.

Note: X is the amount one year after you have retired (i.e after income earned from your nest eggs)