- Bargaineering - http://www.bargaineering.com/articles -

Rule of 33

Posted By Jim On 10/11/2011 @ 7:05 am In Retirement | 1 Comment

Here’s a rule I’d never heard of until I read this retirement article on NPR [3] – “I use something that I call the Rule of 33,” he says. “You need 33 times what you want to spend in your first year of retirement.” He, in that article, is Dallas Salisbury, president of the Employee Benefit Research Institute; and I can’t find any other reference to that rule.

As it turns out, it’s similar to another rule I’d read about regarding retirement savings – the 4% rule. The 4% rule says that you should expect to spend 4% of your nest egg each year if you want it to last. Between Social Security and fixed income investments, 4% of your nest egg should last you for your entire retirement under normal circumstances. As is the case with all rules of thumb, your mileage will vary.

The Rule of 33 isn’t much different since it’s a slightly more conservative version of the 4% rule. Having 33 times what you need to spend in your first year means you’re only spending 3% of your nest egg each year. One divided by 33 is about 3%.

Sadly, whether it’s 3% or 4%, all the statistics seem to show that we aren’t saving enough!

Article printed from Bargaineering: http://www.bargaineering.com/articles

URL to article: http://www.bargaineering.com/articles/rule-33.html

URLs in this post:

[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/rule-33.html

[3] retirement article on NPR: http://www.npr.org/2011/09/28/140875965/saving-for-retirement-how-much-do-you-need

Thank you for reading!