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Posted by Janine (MONEY FORUMS: 5, Answers: 0)
Asked on September 15, 2015 9:24 am
This is a complex question as the answer is dependent on a lot of variables. These include the age at which you plan to retire, your comfort with investment risk, your health, and the lifestyle you need or want to have in retirement. For young people far from retirement these may be unknown, they tend to become clearer as retirement gets closer. A starting point is to figure retirement expenses at eighty percent of current income. A sustainable income stream from an investment pool would generally be four percent or less of the pool. So to generate an income of a certain level you would need about 25 times that to create a sustainable income stream. We can simplify the math, twenty five times eighty percent of income is the same as twenty times income. For example, for someone earning 30k who wants to be able to produce eighty percent of their income in retirement they would need 600k. This does not take into account income from social security; calculating in social security would reduce the amount needed.