If Your Average Income Is $10,000 A Month, Your Retirement Success Probability Is Above This Number

Planning a successful retirement is a complicated task. Workers who are diligently saving money may feel fairly confident in their approach, but all manner of external factors can influence the outcome. Retirement age might come amid a prolonged bear market for some, leading to adjustments in their actual date of retirement, or a careful drawdown strategy to account for depressed pricing. However your retirement target arrives, you'll certainly be engaged in careful monitoring of the monthly drawdown figure you can afford. For most retirees, around 70% to 80% of pre-retirement income is necessary to maintain their same lifestyle, but going above and beyond can bring incredible expansion opportunities for retirees.

Many of your larger bills will be paid off or nearing their end when you leave the workforce — your mortgage obligation, for instance, is likely to be at its coda if you plan to stay in the same home. With additional funding and fewer bills you'll have expanded buying power to go on vacation more often or engage with your hobbies on a more comprehensive level. Saving enough to deliver around $10,000 each month in retirement income may be a milestone goal for many eyeing up their exit from working life. This is a significant amount of retirement income, to be sure, and adds up to nearly double the average salary in the United States today. But inflation will continue to push this figure and the expenses of everyday life northward, so it's actually a goal that might make sense for younger workers looking long into the future.

The Monte Carlo simulation is an analytical test to help determine the most likely outcome of any particular set of circumstances. It's a good tool for exploring your retirement savings strategies since it delivers a bell curve that signals the most common result of testing parameters. Before diving in, it's worth reviewing some key facts: The average Social Security check came out to around $1,900 in 2024. Also, waiting to start drawing your benefits after full retirement age can boost your benefit amount above the 100% payout figure. Assuming roughly $2,000 in monthly Social Security benefits, that leaves around $8,000 to make up for through individual savings efforts. Based on the 4% retirement savings rule, a retiree would need to have saved roughly $2.4 million to hit this figure and continue growing their underlying assets. Simulations place a slightly lower savings figure of $2.1 million as a great starting point (providing an 80% success rate).

The 4% figure is a significantly conservative approach to drawing down funds, and with a larger portfolio, it may not be necessary to protect the principal value as much. However, it's still essential to maintain at a neutral balance in your assets, especially early on in your retirement journey. Generally speaking, the data points to a high probability that your retirement lifestyle will survive at this pace. Put in context, if you start saving at 20, you'll need to set aside around $540 every month to hit the $2.1 million goal.

Saving enough to deliver on a drawdown target of $10,000 a month is the most important feature in achieving the lifestyle you envision. Properly supporting your goals long-term can unlock your ideal golden years lifestyle. However, data doesn't always show a perfect path forward, and there are some potential problem areas that can still affect your retirement success. 

Even if you've saved the ballpark figure of $2 million, unforeseen changes in the stock market could introduce severely negative pressure on your nest egg, shifting your drawdown strategy and making it a good idea to limit your spending for at least a short period of time. There could also be any number of economic factors that impact the value of your buying power — egg prices, for instance, have recently seen explosive growth. Rigidity is no one's friend in retirement planning, and an ability to adapt to changes will always help support you and your plans. However, with a savings target in this range, and a successfully executed strategy to get there, you're likely looking at a monthly budget of around $10,000 without too many hiccups or needed alterations.