Plan for Retirement

November 6, 2006 at 7:49 pm 2 comments

Too many people fail to plan, especially for retirement. They feel they are doing enough by using 401k’s and IRA’s provided by their employers. But what most Americans don’t know, is how much they should be putting away each month to ensure a comfortable retirement. Here’s a tip to help you make sure that you can retire with dignity.

First Things First.
Let’s determine how much you’ll need, or want, based on the rate of return your investments should be bringing in. A good rate is 12%. Not the 6% or 8% people brag about. Why 12%? Simple. If we are saving at 12% and inflation is at 4%, then we are moving ahead of inflation by 8% net per year.

Step One.
Determine the annual income (today) you wish to retire on ($_____) and divide by 0.08.

Step Two
With a 12% rate, you’ll be netting 8% so that’s what we’ll use.
Nest egg x Factor (below) = Monthly Savings Needed

8% Factors (select the one that matches your age or goal)
factor
What does your monthly savings need to be to retire comfortably? Ours is $838.75.

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Entry filed under: Money Fun, Retirement, Saving and Investing.

Did you know? Kids and money, crisis avoided..

2 Comments Add your own

  • 1. Dimes  |  November 10, 2006 at 8:51 pm

    Humm, that’s an interesting tool but the monthly amount seems really low.

    Reply
  • 2. chaka42  |  November 10, 2006 at 10:46 pm

    That’s the point though. Much of the work comes from finding the right funds to put that money into. Compound interest does the rest.

    Of course, the key is to leave the money in there until retirement.

    Reply

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