Under the “4 percent solution,” you should spend no more than 4 percent of the total value of your nest egg annually. At that rate the odds are good that you will not run out of money even if you live to a hundred. It is highly likely, too, that you will also be able to leave your heirs with a sum of money that has the same purchasing power as the total of your retirement nest egg. Under the 4 percent rule, you would need $450,000 of savings to produce an income in retirement of $1,500 per month or $18,000 per year.
