Retirement usually involves giving up your annual salary, but you will still need an income to survive.
While Social Security will cover a part of your budget, the rest of your money will most likely need to come from your savings and investments.
And for older Americans, that may be a problem.
The median baby boomer’s 401(k) plan has a total balance of $69,900, according to Fidelity. Assuming they withdraw 3% of their savings per year, they would be left with a total of less than $2,100 to spend.
If you want bigger drawdowns, you’ll need to save up a much larger nest egg before you retire.
NerdWallet crunched the numbers, and we can tell you how much you need to save now to get $50,000 every year in retirement, without taking a bite out of your principal.
First, some ground rules. The numbers assume you will retire at 65 and have no money in savings now.
For investing, we assume an annual 6% return when you are saving and a more conservative 3% rate for your “interest-only” retirement. We do not factor in inflation, taxes or any additional income you may get from Social Security.
Check out this video to learn more.
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