The Back of the Envelope Calculation for Retirement

So how do you know if you can retire on what you have?  Make yourself an honest budget based on everything you spend in a month; including once a year items and debt reduced to a monthly amount (do not take into account taxes on income items).  

Subtract from that fixed monthly amounts like SS and pensions.  Add to this any monthly taxes you need to pay on the SS / pensions. This is what amounts to your "fixed" income (even though the amounts might change in the future).  The amount you have left over is what you need each month minimally to survive. If you have a negative amount, congratulations you can survive on SS / pension amount. 

If it is a positive amount then look at any amounts you have in 401 ( k ) s / IRAs / Roths, etc. Take 4% of that, divide by 12 to get a monthly amount. Take this amount from the previous calculation and add any taxes to be paid.  This is what amounts to your "variable" income.  If that amount is more than the positive leftover from your previous calculations, congratulations you can make it on what you have saved up. If it is less you have some decisions to make.

It varies based on your lifestyle and where you live and debts you owe. I live in a high cost of living area but have been blessed with a job that has allowed me to save up enough to survive. It’s different for everyone, it’s not a one size fits all.