How much money should you have saved in retirement to maintain a 50k a year lifestyle?

Question

assuming a 5% inflation rate

Answer 1

If you are somewhat close to retirement it will take a little over $1.000,000. Here is the basis of this calculation---C.D.s are paying around 5.4 at present; therefore a Million will yield $54,000.
Given a need of $50,000 the other $4,000 plowed back as retained earnings will kind of keep up with inflation.
Conclusion, $1,000,000 plus is the bare minimum to maintain the lifestyle without tapping any principle too soon.

Answer 2

I think if you have at least $4000 per month coming in,, you'll be OK. Right now the retirement plan for state worker's in CA is either 2% or 2.5% at 55 years old. When you multiply the 2% times the number of years worked, say 25 years, you come out with 50% of whatever your salary is at retirement age. The longer you work, the more you get obviously. Because the state has been collecting and using your money for all those years, they will pay you for the rest of your life, and if you set it up properly, when you die they will continue payment to your beneficiary as well. Depending upon where you are starting from as far as retirement saving, I would always save the maximum amount allowable and live on whatever the rest is. People are living so much longer that you need to make sure that what you have when you retire will be enough so that you don't find yourself going back to work (out of necessity) when you're in your 70's!!

Answer 3

Let us assume that you are clever and can manage a 10% return on your capital. If inflation is 5%, then 10% of $1,000,000 will yield $100,000 annually, and that would be $50K before taxes. If you have all your million in a Roth IRA, there will be no taxes.

Of course, Social Security would pay about $1500 per month on $50K annually, and that would come to $18,000 annually, so you'd need only about $820,000.

If your home is paid for, your costs will be greatly decreased. If you were to live in Mexico or Costa Rica or the Bay Islands of Honduras you could have a much higher standard of living, or perhaps the same standard of living with a lot less money.

Answer 4

Are you talking about retiring soon? Will you have a pension? How much social security do you expect? How much additional will you need? If you have some pension money coming in, plus social security, might be able to maintain a $50K lifestyle with about $300,000 in savings. If pension is high, might not even need that much.

If you're talking about 20 years down the line, or even longer, it's pretty impossible to judge - there are way too many variables. But putting as much as you can into savings, especially something like a Roth IRA where it will grow tax-free and be able to be taken out tax-free, is a good idea.

Answer 5

That's pretty simple: given the uncertainties of life and the economy, I'd allow a 100% safety margin and say, plan on an income stream from an investment that would be $ 100,000 per year after taxes.

Check the Tax Table from the latest issue of IRS Form 1040 Instructions, and I guess the gross income stream would need to be quite a bit higher than that. Let's just say, for purposes of following through this calculation, that a 28 percent overall tax bracket on what the IRS calls "unearned" income, is the correct bracket. Then 100,000 times the reciprocal of (100 minus 28) = 72 percent, means the gross income stream needs to be a minimum of $ 138,889.
Divide this figure by the rate of return. An investment paying 10 percent annually requires a lump sum of one million, three hundred eighty-eight thousand, nine hundred dollars, roughly.

Answer 6

First off, where do you find a job that pays 50k a year?

Answer 7

$1,000,000,000

Answer 8

hard to answer because inflation rate.... no one knows what it'll be when you retire....