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The 2 Essential Numbers You Need to Know to Guarantee a Successful Retirement

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Setting a savings target for your nest egg — say, $500,000, $1 million, or whatever — can be an effective step in preparing for retirement. But it’s not nearly enough.

You also need to have a reasonable sense of how much income your nest egg will generate after you retire.

Unfortunately, when researchers recently queried nearly 600 workers as part of a broader survey of American adults for the Wells Fargo/Gallup Investor and Retirement Optimism Index, they found that most of them weren’t very good at putting these two crucial pieces of the retirement-planning puzzle together.

The Problem

The researchers started with a simple question: Do you have a specific number in mind for how much money you need to have saved by the time you retire?

Just over half — 53% — answered that they did, with roughly half estimating they’d need $1 million or more and just under a third figuring they’d require $500,000 or less.

So far, so good.

The researchers then dug deeper, asking those who had a savings number in mind to also estimate how much income they could expect to draw from their savings each year in retirement. The number of workers who had a savings target and were also able to come up with an income estimate dropped to roughly 40%.

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