Money Monday: How much money do you need to retire comfortably?

Knowing when to retire isn’t about reaching a certain age; it's about reaching the right financial number, according to Tulsa financial expert Paul Hood.

“Retirement doesn’t take age. It takes money,” Hood said. “If you're going to spend 4% or less of your assets, there's a good chance you won't run out of money.”

From Saving to Spending: Retirement Is About Strategy

Most people spend decades in what Hood calls the “accumulation phase,” where the goal is to grow assets through 401(k) plans and market investments.

“When you’re young, volatility helps you,” he said. “The market goes up, yay. The market goes down, double yay. Because you're buying in regularly.”

But once a person retires, the strategy shifts.

“When you retire, volatility and risk are no longer your friends,” Hood said. “You need a cash flow plan.”

The 4% Rule and How to Calculate Retirement Readiness

The key, Hood says, is calculating how much monthly income you’ll need and working backward using what’s known as the 4% rule.

“Figure out what you need each month to live on. Subtract Social Security or other fixed income. Then divide that remaining amount by 0.04. That’s what you need saved to retire comfortably,” he said.

Why Blending Equity and Insurance Can Help

Hood says retirement plans should include a blend of investment types, not just stocks or insurance-based products.

“There are two camps: people who love equities and people who love insurance,” he said. “The truth is, both are right, and both are wrong. A good plan often uses both.”

He says transferring risk is a smart strategy for some retirees.

“If you can take a third of your money and put it in a product that guarantees you won’t run out of money, and that takes care of 70% of your income needs, that’s a good product.”

Talk to a Professional

Hood recommends working with a financial advisor early, not just when retirement is around the corner.

“It’s all about cash flow strategy,” he said. “Start now, and you might retire in 10 years instead of 40.”