Okay. We know you don’t need $12 million to retire, but how much do you need?
Have you ever wondered about this but don’t know how to go about it? Here is some help that the folks at GoBankingRates help put together. The first chart assumes that you will be withdrawing $100,000 every year in today’s dollars, and that inflation will be 2.5% (that’s why the later you retire, the more you actually need because if you wait till next year to start withdrawing, you will need $102,500 to have the same purchasing power).
To keep things simple, there’s an assumption that you will be withdrawing the same amount every year. It’s not the most accurate assumption since this changes as your needs change but if you’ve never calculated how much you need to retire, this is a good number to start off with.
Note that in reality, inflation will likely be higher than the assumption of 2.5% a year, so view these numbers as the bare minimum. The chart also assumes a 6.5% return on your investments, and an average depletion of all your money at age 105, so if you believe your situation is different, then make adjustments from there.
Let me stop typing, because the charts and graphs below are much more interesting. Find out how much you know about retirement planning and see if your plan is ready for prime time.
(If you don’t see the picture, please click here to go to MoneyNing.com. If you want to see a bigger version, click on the image.)
- E*Trade IRA - Official Site