How Much Do You Need To Retire
The amount you need to retire depends upon the length of retirement, inflation rate and anticipated return on money used for retirement. For example, if you rely on 70% of you pre-retirement income during retirement and Social Security provides 40% of that, your investment account will need to provide the remainder. An account holding 10 times your pre-retirement income and returning 6% annually with 3% inflation (the historical long term average) will provide the needed amount for 40 years.
Unfortunately, there is persistent talk of cutting Social Security benefits. If you don't believe Social Security benefits will be there for you, the investment account would be depleted after 18 years. An investment account earning 9%, or 6% above inflation, would be depleted after 27 years with no Social Security contribution.
How much do I need to retire? If you believe at least some form a Social Security benefits will be available to you, a good answer would be at least 10 times your pre-retirement income returning at least 3% more than inflation.
The information presented here is the opinion of the author and may quickly become outdated and is subject to change without notice. All material presented in this article are compiled from sources believed to be reliable, however accuracy cannot be guaranteed. No person should make an investment decision in reliance on the information presented here.
The information presented here is distributed for education purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or participate in any particular trading strategy.
Performance data showing past performance results is no guarantee of future returns.