We have 38700 in savings. Compound interest 4.5% in 10yrs will be 167,000.00?

Question

I will be 40 years old and my wife will be 37 with 167k cash in the bank which is great..but at that point..what do we do with the money?
How can we turn this into early retirement?

We add 8400 dollars per year..thats how we get to 167k in 10 years, 368k in 20 years

Answer 1

Unfortunately, 4.5% is not going to get you to early retirement unless your planned cost of living is extremely low.

Also, compound interest on $38,700.00 is actually only 60,099.92 which will only give you the buying power of $45,689.82 if inflation stays under 3%. You are probably calculating additions to this fund which you did not list above.

To get to 167k in ten years at 4.5% you need to be adding $8,700.00 each year to this fund.

Inflation averages between 2-3% annually. That mean you are only getting about 2-2.5% actual return on your buying power in the future.

If you can get your ROI up to 12% and not reduce it, you can get US$1M after inflation when you turn 56.

Download the 40-year investment calculator at the link below and plug in your numbers. It will show you what each investment rate can get you in the future and also shows how inflation eats at future dollars.

It is the best free investment calculator I have found to date.

Answer 2

You should not have your entire portfolio in cash, especially if you are retiring in more than 10 years. You cannot count on the savings rate for cash to be 4-5% for the next 10 years. On average, cash generates WAY less of a return than that.

The good news is that you are very young and have plenty of time to save. $167,000 is not nearly enough to last 2 people 40 years or more. Keep in mind that the purchasing power of a dollar lesses every year due to inflation.

How to secure your retirement:

1. Make sure your investments are in the best retirement vehicle for you--i.e. an IRA or a 401k. This way you save a lot in taxes while you accumulate your retirement money. Your funds should be mostly in stocks--some international and some US. Just buy a target retirement fund within your IRA that fits your time frame for retirement (which should be another 20 years).

2. Contribute as much as you can afford to your retirement account(s), while also being sure to have some cash savings for emergencies and for shorter term goals like a new car, a house, and vacations.

3. Pay off your mortgage before you retire (if you don't own a home; buy one and then pay off the mortgage before you retire). This will give you a roof over your head no matter what and also lessen your income needs during retirement.

4. Live your life--but keep working for now. You can still probably afford to retire earlier than most, but not in the next 10 years.

Answer 3

You probably don't realize it now but you are dealing with SO many different issues here. Savings, retirement, inflation, investments, and so on...You are a perfect candidate for a financial advisor. HOWEVER, I think if you can take 6 mos. to plan a vacation you can probably plan your own financial future (i.e. free). Yahoo! is a good source for info as well as various web sites. As for financial advisors, everyone wants to make a buck. Nothing wrong with that. You might try a credit union if you have an account there. The consultation should be free and very low fees if any. My CU has free financial advisors, seminars,etc. Banks have a larger product line but if you research you can find how to buy stocks, mutual funds, etc on your own via internet. After all, for stock purchases and mutual funds they just want your money so why pay a bank or brokerage firm commission and fees on things you can do yourself. In case you haven't noticed, I am big time DIY. Not for everybody of course. Simple answer is pay a professional. They don't care as much about your money as you do but they are knowledgeable (for the right price.)

Answer 4

Buddy, 167k is nowhere near enough to retire, especially when you're that young. For a comfortable early retirement you'd need at least 2 million.

Answer 5

Not even close to being able to retire on $167K.

Don't wait 10 years to do something with it. Find a Certified Financial Planner who you can sit with and help you determine the best course of action to make your retirement wishes come true.

Answer 6

1st< Annuities I believe yield more interst than keeping it in a savings and you could use an annuity as a very strong asset for applying for loans. You can also get loans or sell out oart of your annuity for cash if times get hard. Personally, I would never leave anything in a bank account for long. I would go with an annuity or CD or something.

Answer 7

you're heading in the right route. Compounding pastime purely means that pastime posts for your account, and also you earn more beneficial pastime on the initial stability AND the pastime that were added for your account. in case you somewhat opt for to save money, go away it in there for therefore long as you could with out taking it out. this can artwork in any discounts account, yet attempt to get the optimal Annual share Yield a danger!

Answer 8

????
If you can achieve that I'll give you my money to invest

$38700 compounded at 4.5% = $60100 in 10 years

You would need 33 yrs to accumulate $165000
and in 40 years it would be worth $225000

This assumes that you do not contribute any money each year.