How Much Money Do You Need to Retire? It’s All About Final Glide

There’s a tried-and-true rule that works for most people, but not everyone.

Jason Depew

Thursday, February 24, 2022 at 12:24 PM ET

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The concept of final glide can also help with your finances. [File Photo: Adobe Stock]

Key Takeaways:

The article introduces the "Four Percent Rule" for financial independence, drawing an analogy from a glider pilot's "final glide" calculation to ensure a safe return home based on their aircraft's glide ratio.
The Four Percent Rule, derived from the Trinity Study, suggests that retirees can safely withdraw 4% of their initial investment portfolio each year for a 30-year period without running out of money, even when accounting for inflation and historical market downturns.
This conservative rule is robust, often allowing portfolios to grow or last indefinitely, and provides a practical method to calculate either safe annual spending from a given investment or the total nest egg required to cover desired yearly expenses.

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A good glider pilot can maximize flying fun for the dollar like no other. When I instructed at the Black Forest Soaring Society (BFSS) at Kelly Air Park in Colorado, the pilots with personal racing gliders would launch every Saturday or Sunday around noon. They’d immediately head west and start catching thermals before spending the rest of the day galavanting around the Rocky Mountains. We wouldn’t see them again until just before sunset after the thermals had all died out. They got all that flying for the reasonable cost of a monthly membership fee, and a $40 launch behind the club’s towplane.

The BFSS pilots knew they could safely reach home at the end of the day because they were able to calculate what glider pilots call “final glide.”