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.

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