Assuming that by the time one retires their house will be paid for and debt will be eliminated. And also assume an average person who isn't living an extravagant lifestyle. Does anyone have some general guidelines? For example - At age 30 you should have ___, at age 35 you should have ___ in your 401K, at age 40....etc.
2007-01-11 07:55:31 · 5 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
I am sorry, but there is no such answer. That is a very individualistic situation. There are two basic approaches to making an educated guess. One uses somewhat advanced math to guess what you need based upon current standard of living to be maintained, the expected lifespan of the individual, and the expected inflation of money. The other is to put away as much as you can and hope for the best.
I suggest a combination of the two. Talk with a financial adviser to help you plan. Then put back a bit more than that. Some suggest putting back 15 percent of your income. That is not always possible. Just know that anything you save now is that much more that you don't have to worry about tomorrow.
2007-01-11 08:14:15 · answer #1 · answered by Jack 7 · 0⤊ 0⤋
Well...depends on if you think that Social Security will still be around. If you assume that you will only have your 401k then assume that you can take only 4% of your account balance each year to be sure that you have enough to live on now matter how old you get then you can calculate how much you'll need. Any more than that and you run the risk of depleting the principal too quickly. So, if your lifestyle can live on 40k a year then you need 1 million in there.
Now whether you can get there from where you are at right now or any stage along the way is dependent upon your investments. ex: you aren't going to make it if you invest all in a money market or bond fund regardless how much you put in. And conversely..if you put in 15k each year and invest 100% in S&P for 40 years you'll exceed that by far.
You're the only one who can say how much you'll need ot live on, and how aggressive your investments can be...how much you put in each year and when you start putting it in is totally dependent upon those factors.
2007-01-11 18:14:03 · answer #2 · answered by digdowndeepnseattle 6 · 0⤊ 0⤋
Try this website: www.choosetosave.org. You can plug in actual figures and it will tell you how you're doing.
If you want to live on investments alone, and you could make about 8% on your money, about 18 years before you retire you'd want to have about 5x your salary in investments. So, if you want to retire at 65 and make $50,000 a year from investments, you'd need $250,000 by age 47 or so. Search on the 'net for a discussion of "The Rule of 72" to learn more about how to figure this out.
I think the book "The Millionaire Next Door" also had calculations on how much you'd need and by what age, but I'm not sure.
2007-01-12 02:02:09 · answer #3 · answered by Katherine W 7 · 0⤊ 0⤋
As the above answer says, it's hard to say what you should have.
Depends on income, family status, etc. It also matters if it's in a Roth or not.
So, instead, I'll give my opinion on what I would consider
impressive to have. If you beat this, or are close, you are
probably in fairly good shape.
30 years old - $40,000 in retirement savings.
35 - $100,000
40 - $200,000
2007-01-11 16:36:02 · answer #4 · answered by Quixotic 3 · 0⤊ 0⤋
the general estimate is that you need a million dollars to retire in comfort.
factor in what kind of government or work benefits you get after retirment, a million less that number will tell you what you need.
it should be a pretty scary number, which is why retirement planning is such a big deal.
2007-01-12 02:27:44 · answer #5 · answered by Anonymous · 0⤊ 0⤋