"When you are getting close to retiring, you need to make sure your nest egg is large enough to supplement your Social Security benefits. The reality is, with Social Security only replacing 40% of your income, you can't live on these benefits unless you have other money coming from somewhere or plan to live a very meager lifestyle and hope you don't face high healthcare costs."
"Based on this rule, your $250,000 nest egg would provide you with $10,000 in annual income. Chances are, that is nowhere near the 40% of your pre-retirement earnings that you need your nest egg to replace. And, if you combine that income from investments with an average Social Security benefit, which is around $2,015 per month for the average retired worker in 2026, you'd be looking at $34,180 to live on - unless you had lots of money coming from somewhere else."
Social Security replaces roughly 40% of pre-retirement income for many retirees, making supplemental savings essential. A common guideline is the 4% withdrawal rule, which on a $250,000 nest egg yields about $10,000 in the first year. Combining that investment income with an average Social Security benefit of roughly $2,015 per month results in about $34,180 annually. That total typically does not meet typical pre-retirement income needs. The 4% rule has limitations, especially in low-rate environments. Close to retirement, individuals need to assess expected income from savings and pursue other income sources or lifestyle adjustments.
Read at 24/7 Wall St.
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