Retirement Question?

Question

Retirement Question for all you smart finance wizards.Ok here is a toughy I hope some financial guru's can help me out. I am 22 years old and am looking at my retirement. I want to have atleast 2 million to retire on at age 60. I would like to start investing in a Roth IRA asap. I also plan on doing a 401 K plan once I get a real job after graduating. What I'd like to know is what will I have to invest in the Roth IRA up til age 60 and what will I need to invest in my 401K plan to have atleast 2 mill by age 60. Lets assume I am getting 8 percent return a year. Now I also realize that 2 million today will not equal 2 million by the time I am 60. I would like to invest 3% more(inflation rate) each year so that by the time I really am 60 I will REALLY have 2 million dollars. I hope you know what I mean. Looking forward to any responses. I want to adjust for inflation rates.

Answer 1

(Sorry the format won't come out on the answer, so try to line up the columns as best as possible.)

Here is how you figure out a monthly retirement plan (per Dave Ramsey, Financial Peace University)
Step One:
Annual Income (today) you wish to reitre on $ ( )
divide by .08
(Nest egg needed) equals: $ ( )

Step Two:
To achieve that nest egg you will save at 12% netting 8% after inflation so we will target that nest egg using 8%,
( ) X ( )= ( )
Nest Egg Needed X Factor = Monthly Savings Needed

8% Factors (select the one that matches your age)
Age Years to Save Factor
25 40 .000286
30 35 .000436
35 30 .000671
40 25 .001051
45 20 .001698
50 15 .002890
55 10 .005466
60 05 .013610

Answer 2

OK: First of all folks in hell want ice water .. don't mean they are gonna get it.. 2 mill is a lot.. and by the time you get there it probably won't buy much.. Anyway the main way to get a lot at the end it to front load it at the beginning.. If you can buy into a 401 and a Roth at max and also buy property in Southern California and hold onto it until you retire. You might just make it.

Answer 3

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Answer 4

You just want us to help you do your homework, right? Get a financial calculator!
$2mil is your PV, therefore, calculate FV using 3i and n=60-22
That will be the amt you need in future for it to equal $2 mil now.
As for how much contribution you need to make now, use pmt to calculate. Take i=8 and n=60-22

Answer 5

GO to "msn money central" It has a calculator for figuring just how much you need to put away to achieve your goal.

I send all my clients there and have them play around with figures so they get the hang of it and get interested in their financial future!

A simle formula for figuring how much you will have as income off your investments is : Take an amount, divide it by half and drop a zero... that will give you the amount of interest you will receive off that amount annually. Fo example : $1,000,000.oo divide by half = $500,000.oo then drop a zero = $50,000.00. You will get $50,000 annually off the one mill.