Here’s How Much You Need Saved to Retire Rich in the Average American Suburb

With years of painful inflation squeezing budgets and making it harder to save, millions of Americans are wondering if they’ll ever be able to retire at all — and many of those who thought they had substantial nest eggs are now left wondering if they’ll have to work longer than they had planned or limit their lifestyles once they close out their careers.

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But some people don’t want to just retire. They want to retire rich.

A new study from GOBankingRates found that a rich retirement — one where you can spend double the amount needed to cover your city’s basic living expenses — would cost an average of $1,392,738 for 20 years in America’s largest cities. For 25 and 30 years, the average is $1,740,922 and $2,091,198, respectively. In places like the San Francisco Bay area, three decades of retiring rich can cost $5 million, $6 million, $7 million or more.

But what size nest egg would you need to amass for a rich retirement in the suburbs ? It turns out that the ‘burbs aren’t San Francisco — but they’re not cheap, either.

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You Might Need $1.5 Million Just To Be Comfortable for 30 Years

Dennis Shirshikov, a professor of finance at the City University of New York and head of growth at the real estate investing platform GoSummer , analyzes local and regional living costs as part of his profession.

His analysis produced a nice, round number for a rich suburban retirement — although it’s one that would make many suburbanites wince.

“To achieve a rich retirement in the average American suburb, I recommend aiming to save at least $3 million,” said Shirshikov. “This figure is based on the assumption that a ‘comfortable’ retirement nest egg would be around $1.5 million.”

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If you think that $1.5 million is enough to keep you much more than “comfortable” for at least 30 years, look at your annual pre-retirement income before you make the mistake of lowballing the nest egg you might need.

“Here’s the rationale,” said Shirshikov. “Typically, a comfortable retirement requires 70% to 80% of pre-retirement income. If we assume the average suburban household earns $100,000 annually, they would need $70,000 to $80,000 per year in retirement.”

The Pew Research Center conducted a COVID-era study that found the average household in large suburban counties earned $101,000, which puts Shirshikov’s estimate on course so far.

The Gold Standard of Withdrawal Planning Says $3M Is the Magic Number

The 4% rule is the most common and often-cited standard for retirement planning. While it must be modified for each individual to succeed, it provides a framework for planning scheduled annual withdrawals that account for inflation and rising living costs while preserving your nest egg to endure for a 30-year retirement.

This is the basis of Shirshikov’s assessment that the average suburbanite needs $3 million to retire rich. Remember that he said the average suburban household earning $100,000 would need $70,000 to $80,000 to maintain a comparable lifestyle in retirement.

“Using the 4% rule, which suggests you can withdraw 4% of your retirement savings annually without running out of money, $1.5 million would provide $60,000 annually.”

Keep in mind that $60,000 would be the base amount for the first year’s withdrawal only. Subsequent years would see bigger withdrawals to account for inflation — but retiring rich requires much more than just the ability to keep up with rising prices.

“Doubling this to $3 million would provide $120,000 annually,” said Shirshikov. “This would allow for a more luxurious lifestyle, additional travel and greater financial security.”

This article originally appeared on GOBankingRates.com : Here’s How Much You Need Saved to Retire Rich in the Average American Suburb