What is the right amount to save when aiming for a certain retirement goal?

I am 58 years old earning $100,000 per year and have investments in multiple retirement accounts totaling $686,250. I'm retiring at the age of 65. I am currently investing $16,000 per year in my accounts. I project to have $848,819 in my retirement accounts at the age of 65. I will be collecting $2,200 in Social Security when I retire. I also do not own my home due to my divorce. How much money will I need to hit my projection? Should I be saving more?

Retirement, Retirement Savings
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September 2017
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If you are starting out with $686,250 and adding $16,000 per year, you should easily have $848,819 in 7 years.  In fact, you will probably have more than that based on historical returns of a diversified portfolio.

 

But I'm not sure that's the question you are asking.

 

You may be asking if $848,819 is enough money for you.  The first step is finding out how much money you think you will need to live on per year.  Then deduct your sources of income like social security and any pensions or annuities you may have.  What is left is the gap you will need to fund.

 

Many financial planners have historically advocated a withdrawal rate of 4% from retirement accounts as a safe amount to pull out.  I think that is a little high as 3% is a more conservative amount people should consider for their individual situation.  3% of $848,819 would yield $25,465.  Combining this with your social security benefit would give you about $50,000 per year.

 

Your income requirements minus the $50,000 is what you will need to make up either through additional savings before you retire, a part time job in retirement or a drifferent investment approach to yield higher savings.

4 weeks ago
September 2017
September 2017
September 2017