How Much Do I Need to Retire?
“How much do I need to retire?” is a question frequently asked. The answer will vary from person to person, sometimes greatly. One will have to make two decisions first before an actual amount can be determined. The first decision is “When?” do they want to retire? The second decision is “What?” type of lifestyle do they want to lead in retirement? Once these two questions are answered, a number can be easily figured. The next decision to make is “How?” does one want to go about attaining that number?
How much do I need to retire?
For example, if I wanted to retire at the age of 40 and live on $100,000 a year I would take my life expectancy (let’s say 85) and subtract my retirement age (40) and then multiply the difference (45) by $100,000. “How much do I need to retire?” $4,500,000! Or, not?
There are two approaches one could take to hit their “financial freedom” number. Most will approach their retirement plan using an “accumulation” mindset. In other words, most believe they need to work, work, work and save, save, save $4,500,000. Over the long run, the stock market has had an inflation-adjusted annualized rate of return between six and seven percent. Using this traditional approach, one would need to begin saving at the age of 20 just under $1,000 per month to accumulate $4,500,000 by their 40th birthday. So, “How much do I need to retire?” can be answered by either $4,500,000, or save just under $1,000 a month for 20 years.
Retirement Calculator -
This simple retirement fund calculator can be used to determine the annual contribution you’ll need to make to your retirement fund in order to reach your goal. The calculator uses your current age, expected retirement age, current amount in your retirement fund, desired amount in your retirement fund, and expected annual return on investment to project your annual contribution.
How Much Do I Need to Retire – An Alternate Approach!
An alternate approach would be that of using a “residual” mindset. Rather than work, work, work to save, save, save, the traditional approach that typically comes with great sacrifice and an inordinate amount of discipline, one could focus on building a residual income that would pay them $8,333 a month (=$100,000). With the right game plan, investing that same $1,000 a month could be achieved in half the time, 10 years or less. Now, “How much do I need to retire?” $8,333 per month and a mere 10 years or less to achieve it.
So, easier said than done? No. It’s not as difficult or as complicated as it may sound to create this type of residual income. All it takes is a proven game plan. I’ve got my game plan, get yours here… and it’s free. The answer to the question “How much do I need to retire?” will no longer be a mystery. Get your game plan here.
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