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Wes Moss Explains the $1000-Bucks-a-Month Rule

There are a number of financial “rules of thumb” that I feel strongly about as they relate to supplementing retirement income with retirement savings. While I like to believe all of these rules hold a good bit of value and are well understood, one of my all-time favorites is the $1,000-Bucks-A-Month Rule.

What is it? Simply put, the $1,000 Bucks-A-Month Rule works like this: For every $1,000 bucks per month you want to have at your disposal in retirement, you need to have $240,000 saved. Taking a closer look, let’s see how $240,000 in the bank equals $1,000 a month: $240,000 x 5% (withdrawal rate) = $12,000. $12,000 divided by 12 months = $1,000 a month

This is important because it adds an extra slice of “income pie” on a monthly basis. The $1,000 Bucks-A-Month Rule is a guide to use as you are accumulating assets (increments of $240,000), and a guide to carry you into your retirement years. This easy-to-follow bit of wisdom can help you remember that you are saving money so that it can one day replace the income stream you will lose when you stop working.

 

 

Disclosure: This information is provided to you as a resource for informational purposes only. It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.


 

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