With annual incomes never being enough to cover all expenses and credit purchase and payments leaving very little to save, how can one save for the rany day ahead? The information detailed below gives a good insight into how to build your total savings and investment income to sustain you for twenty or thirty years after retirement. Of course, it does not mean that you should become “tired after retirement” and just lounge around living it up until death comes knocking at your door.

 

Sad as it may be, there is life after retirement. Many people set up private businesses or take up new employment just to keep busy and augment their savings, or to leave something extra for the following generation. The source of the article is Barbara Mlotek Whelehan, who can be reached by e-mail at boomerbucks@bankrate.com.

 

The succinct details are:

 

“Below is a chart that will help you determine what you'll need at the time you retire. It's not a perfect chart. But it provides a target to aim for so you can sustain yourself for the duration. For instance, using the above example, if you need to supplement your expected Social Security and pension payments with an additional $2,000 a month and you expect to live 20 years, you'll need $464,715.

The pot of gold you need for retirement

Monthly income $1,000  Wad of money needed for 20 years  $232,358
Monthly income $2,000  Wad of money needed for 20 years  $464,715
Monthly income $3,000  Wad of money needed for 20 years  $697,073
Monthly income $4,000  Wad of money needed for 20 years  $929,431
Monthly income $5,000  Wad of money needed for 20 years  $1,161,788
Monthly income $6,000  Wad of money needed for 20 years  $1,394,146
Monthly income $7,000  Wad of money needed for 20 years  $1,626,503
Monthly income $8,000  Wad of money needed for 20 years  $1,858,861
Monthly income $9,000  Wad of money needed for 20 years  $2,091,219
Monthly income $10,000 Wad of money needed for 20 years $2,323,576

Monthly income $1,000  Wad of money needed for 30 years  $342,965
Monthly income $2,000  Wad of money needed for 30 years  $685,929
Monthly income $3,000  Wad of money needed for 30 years  $1,028,894
Monthly income $4,000  Wad of money needed for 30 years  $1,371,859
Monthly income $5,000  Wad of money needed for 30 years  $1,714,824
Monthly income $6,000  Wad of money needed for 30 years  $2,057,788
Monthly income $7,000  Wad of money needed for 30 years  $2,400,753
Monthly income $8,000  Wad of money needed for 30 years  $2,743,718
Monthly income $9,000  Wad of money needed for 30 years  $3,086,682
Monthly income $10,000 Wad of money needed for 30 years $3,429,647

The above sums assume your portfolio will earn a 6 percent annualized return during the course of your retirement and endure 2 percent annual inflation erosion. At the end of the 20- or 30-year period, your account will be depleted. If you want to leave money to progeny, you need an even bigger wad of money.

Do these numbers look formidable? Reaching a retirement savings goal depends in large part on how early you start, how much you stash away each month, your risk tolerance, how your assets are allocated, your investment returns, how much you have saved so far and how much time you've got left in the work force.”

 

 

The full article is at http://www.bankrate.com/bankrate.htm and the proof of it is from a recent study.

 

The relevant calculator to be used for the figures above should use a Monte Carlo Simulation technique, such as can be found at calculator.

 

Hope all this helps you, no matter your age presently. Cheers and best wishes as you stock up on your future riches.