How much money do you think you would have to have to retire and live on the interest?

Question

If you wanted to live in a comfortable way but not over the top ,how much do you think would be needed to just pay the bills have a holiday a year ,and just live on the interest.

Answer 1

An often-heard rule is that you should be able to use about 5% of your savings and cash investments as income each year, without dipping into the principal of your investments. Therefore, if you wanted to live on $40,000/year, you'd need investments of at least $800,000. People often make this topic unusually complicated, and there are lots of websites, with information good and bad, on the topic, but this should give you a rough idea.

Answer 2

Well most banks can offer you rates of 4-5%.

So if you wanted 40,000 to 50,000 a year and didn't want to touch your actual money (just interest) you'd need 1MIL sitting in the bank.

Also "comfortable" varies from one person to another and depends greatly on the choices you made earlier in life. Do you have credit card debt? Is your house paid off? Etc.

If you have no debt and no mortgage you could make half as much as someone who does and still be comfortable. That means you'd only need like 500K to live off the interest.

Answer 3

Depends on a lot of factors.

Truth is, no amount of money will give interest equal year after year because inflation will eat away at that spending power. Your initial investment would have to gain year after year after your withdrawal to ensure that it would last.

Also greatly depends on where you live. Cost of living can change greatly based on the state of the economy.

There are 3 steps to maximize your prosperity.
1. reduce expenses.
2. reduce liabilities
3. increase income
That's it.

Remember also that "living on" this money means it is going to pay your health care costs. Ask any elderly person today how affordable health care was when they were 30 VS today.

There is a good investment calculator at the link below called the 40-year investment calc.

Download it and plug in some numbers. It will show you the effects of your ROI and inflation as the years pass.

Good luck!

Answer 4

It depends on how far away your retirement is. Today, I could live perfectly comfortably on $50,000/year (assuming I wouldn't have to save anymore), especially if I had my mortgage paid off. So I'd only need about $1,000,000 in the bank to live on for 20 years or so if I retired today.

But I won't be retiring for another 30-40 years--and $50,000 a year is going to be probably below the poverty line by then. So I'm aiming to have more like $3,000,000 in my retirement accounts--plus other income sources like rental property.

Answer 5

What really matters is. HOW OLD ARE YOU AND HOW LONG ARE YOU GOING TO LIVE !!!

If you are going to live 30 years, $1,000,000 at 5% interestwould leave you in the poorhouse near the end due to the effects of inflation. $50,000 a year purchasing power now, might only have the purchasing power of $15,000 30 years from now.

A probable age for a 40 year old today to live is about to age 90

so if you retire at 65 you have to figure on financing 25 YEARS.

If you are younger,you figure the years.

Ideally, you will make an investment that increases enough to cover inflation plus your probable living costs, but it won't be interest that does it because that does not grow.

Remember in your calculations, there is an income tax component.

To be comfortable (including loss due to inflation) $50,000/year after tax, Based on $1,000,000. if you are only going to live 10 years

20 years....$1,500,000 But only withdraw $50,000 first year, 50,000 + inflation second year.......Up to year 20

30 years...$2,000,000 but only withdraw $50,000 first year, and adjust for inflation each year.

Answer 6

How much do you need? Assume that 5% interest on a $100,000 will generate $5000 a year of income. Want $50,000 a years? You'll need $1,000,000.

Then again don't forget the taxes.

Answer 7

I suppose you could rub along without a mortgage on about £25k a year. So I would reckon about £350k with which you buy an annuity and also to allow for tax to give you the £25k. Possibly less depending on where you live. South East is expensive in UK

Answer 8

About one million dollars. You can withdraw about 4-5% a year to keep up with inflation and not run out of money. If you had a million dollars today, that would be $40,000-50,000.

Answer 9

I'd be able to live on $3 million dollars relatively modestly for a long time.

Answer 10

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