The S&P 500 gained more than 16% last year despite an unprecedented global shutdown.
But you shouldn't plan your retirement based on double-digit returns.
You should aim to spend up to 4% of your nest egg per year in retirement, according to financial advisor Winnie Sun. That percentage can drop, however, based on several factors such as if your home isn't paid off or if you have high health-care costs, Sun said.
The strategy also assumes that you have a balanced portfolio, focusing more on bonds and cash-type investments for your short-term needs. This allows the stocks in your portfolio to grow for the future, according to Sun.
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Check out this video to see a few different case studies of how much spending money you'll have if you retire on $1 million.
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