Is 10 the Magic Retirement Number?

According to a Lincoln Financial Group study, a 10-times assets-to-income ratio is a guide that can help people determine how they can be better prepared for retirement. In other words, if you are earning $100,000 per year, you need to have $1,000,000 in assets for a comfortable retirement. Understand that this is a guide and not a definitive ratio.

This seems too low to me, as a 10% withdrawal rate with a 5% long-term earnings rate on $1,000,000 will only last 15 years. Either you need more assets, a lower withdrawal rate or a higher rate of return. Perhaps you will need a combination of all three to last the 30 plus years you may expect to live during retirement.

For example, if you reduce the withdrawal to 6% with a very conservative 4% long-term rate of return, the $1,000,000 will last 29 years.  Can you live on $60,000 per year instead of $100,000? If not, the ratios need to change. Increasing the long-term rate of return to 5% makes the fund last for 37 years. Taking out 8%, or $80,000 per year, while earning 5% will cause you to run out of money in 21 years.

How long do you plan to live during retirement?  Each person must determine their own personal ratio, and one of the easiest ways to do this is by working with a financial professional.  Remember, the Lincoln Financial study is a guide to start with.

The study identified four behaviors contributing to retirement success. The behaviors that lead to better outcomes are:

  • Getting advice from a financial professional
  • Participating in an employer-sponsored retirement plan or IRA
  • Saving steadily, and making extra contributions in “power-saving” years
  • Having an investment strategy

The research also identified three behaviors retirees who reached the 10-times goal didn’t rely on. Those behaviors are:

  • Receiving an inheritance. This may or may not happen.
  • Selling a primary home or making money through real estate. Have you looked at today’s real estate market?
  • Selling a business or shares in a former employer’s company stock. Once again, this depends on market conditions and timing.

If these were your largest assets, what would happen if you needed to turn these assets into income at a time when the market is down?

The study reinforces Lincoln’s recommendations for actions that lead to better retirement outcomes.

  • Advice from a financial professional
  • Participate in retirement plans at work (and IRAs)
  • Save steadily and “power save” whenever possible
  • Have an investment strategy

Finally, don’t count on windfalls like an inheritance, or proceeds from selling company stock, a business or your home. To learn more about the Lincoln Financial Life Stages Retirement Power Study, go to

by Marvin H. Feldman

Marvin H. Feldman, CLU, ChFC, RFC, is president of the Feldman Financial Group in Palm Harbor, Fla., and president and CEO of Life Happens. He is a 41-year Million Dollar Round Table member and was the 2002 president. He is a 33-year member of the MDRT Top of the Table and a past Top of the Table chairman. He also is the recipient of the 2011 John Newton Russell award, the highest honor bestowed on an individual by the insurance industry.

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