save to retire

Preparing financially for retirement should be everyone’s job. During retirement, important expenses such as health insurance and medication increase and we must have resources to cover them. But what is the amount needed to support your retirement?

The 4% rule proposed by William Bengen is a well-accepted model abroad, particularly in developed economies. As its rate of return assumptions are close to the current Brazilian reality, its model can be extrapolated to Brazilian cases. The study takes into account fixed income income, scholarship and inflation rate.

Bengen reveals that it is possible to withdraw 4% of its financial resources per year and still have those resources corrected for inflation year after year. In other words, with BRL 300 thousand in investments, 12 thousand can be withdrawn a year without affecting your investments. The idea of ​​the model is to withdraw only part of the interest for consumption, so your equity will remain intact.

Another example for the rule: If you want to live on a monthly income of 5,000 (60,000 a year), the required invested equity is R$1.5 million (4% of 1.5 million is 60,000) .

The model is useful for getting a baseline of how much will need to be accumulated to reach your retirement goals. The composition of the portfolio studied by William Bengen is composed of 50% fixed income and 50% stock market, which may not be compatible with his investment profile.

Don’t take unnecessary risks, a planned retirement brings much more comfort and security to the family.