If someone is making 50k a year and is 35 years old, how much $ will need to be saved to draw from in?

Question

retirement to maintain that 50k a year lifestyle assuming a 5% rate of inflation.

In other words how much money should be invested to draw from the intrest to maintain that lifestyle with out exausting the principal?

Answer 1

I just have an article in front of me that says you wanna make sure your money last 30 yrs, so when you have $1 mil. (they count inflation 3%) you should start pulling 4% which would be $40,000 the firs year and you could increase that by about $1,200/year more.
So I assume if you want 50,000 a year, you'll need more that mil.

Answer 2

Your answer is $747,236.77. If you are assuming a 5% annual inflation rate for costs of living, I am figuring a 9% return annually from your investment of $750,000 which gives you a net annual return of 4%. At this rate, you will be able to withdrawl $4,500 a month for 240 months, or 20 years. You'll have to come up with another $375,000.00 for every ten years after that. You'll technically never be able to live off the interest alone forever because your rate of inflation is higher than your net return on interest. And no bank offers a rate like that, so you'll have to enter the markets of stocks, bonds, funds and futures. It is possible to get this return with a financial advisor, just know you pay for what you get...

Answer 3

Impossible. If you're making 50K a year and you want to maintain a 50K lifestyle, this must mean that you are already living a 50K lifestyle, and there is no money left over to save.

If you decide that you can live on less than 50K, then other questions must be asked before you can get your answer:

When do you plan to retire?
How long do you expect to live?
How much do you already have saved?
(etc.)

Just do a search for a "retirement calculator." Plenty of sites exist that have free questionnaires to help you.

Answer 4

You still are leaving too many variables unanswered.

There is insufficient data to calculate an approximate answer, unless you also specify:

(1) The size of your retirement nest egg at the present time;
(2) The year or age at which you propose to retire;
(3) Whether or not your "drawing from" the retirement nest egg is calculated to eventually consume it, or not; and
(4) If you do allow yourself to touch the principal, what age do you plan to die?

In addition, "inflation" does not affect all consumer items the same!! The price of a gallon of gasoline actually DEFLATED in the mid-1990's. So did the price of a PC, a notebook computer, a LOT of technology-related items. "Inflation" can't be so simplistic as you are making it out to be.

Answer 5

A very simple way to look at it build you saving plan now, be aggressive and let it grow. When your dividends and interest in one year are 50% of your of your living expenses. you are half way to your goal. So if you keep good track of your investments and living expenses and you compare them from year to year you
will see the percent move up from 35% one year to maybe 42% the next.

With this method you can judge how much longer you will need to work, or if that number sound to large lower your expenses and increase your saving to reach you goal earlier.

This method is also very good at helping you keep your expenses down as your income goes up, since we all would like to retire early. By the way this method work with the stock market , real estate or any investment that has a cash flow.