How much do you need to retire? February 16, 2006
MSN Money has an interesting article about how much money you need to save up for retirement. The MSN article states:
Young workers don’t need to get hung up on a specific target for their retirement nest egg. Save as much as you can as early as you can and you’ll be off to a great start. Although there is no hard-and-fast rule, Christine Fahlund, senior financial planner with T. Rowe Price, recommends that young workers try to save 15% of their gross salary (including employer matching contributions) in order to replace 50% or more of their salary in retirement (the later you start, the more you’ll need to save).
I started putting money into my company’s 401k program relatively late at age of 27. But since then, I’ve put in the maximum allowed. We try to put away about 25% of our gross income into retirement savings. I’m assuming that by the time I retire, there will be no government assistance as the US as the current national debt is US$8.2 trillion dollars. There’s an interesting book called “The Number” which talks about “how much money do you need to secure the rest of your life?”
I don’t have “The Number” for myself, but as MSN says:
The sweet spot for the optimum retirement-savings number seems to lie between the two extremes. So someone looking to generate $40,000 a year in retirement strictly from personal savings would need a nest egg somewhere between $500,000 (12.5 times the initial withdrawal) and $1 million (25 times the initial withdrawal).
Do you have your Number?
Source:
By Kiplinger’s Personal Finance Magazine on MSN Money