Though the thought of adequately funding your retirement may seem daunting if you start planning now, you will surely be grateful later. It’s never too early to start thinking about retirement, and it may not be as difficult as you think.
Retirement usually means replacing your annual salary at work with other sources of income to maintain your current lifestyle. While Social Security may cover some of your budget, there are understandably reasons to worry about how much Social Security you might get until you retire. The rest of your money must most likely come from your savings and investments.
CNBC crunched the numbers, and we can tell you how much you need to save now to make $80,000, $90,000, and $100,000 each year in retirement without taking a chunk out of your capital.
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First, there are some ground rules. The numbers assume you retire at 65 and have no current savings.
Financial advisors typically recommend gradually changing the asset mix in your portfolio to make it more conservative as you approach retirement. But even when you’re retired, you probably still have a mix of stocks and bonds, as well as cash. When investing, we assume a conservative 6% annual return when you’re working and an even more conservative 3% interest rate during your “interest-only” retirement.
We also don’t account for inflation, taxes, or any additional income you may receive from Social Security or your 401(k) investment plan.
We have a full breakdown of how much you need to save now if you want to reach $80,000, $90,000, or $100,000 each year in retirement.
Regard the video above to learn more.