Retirement Planning Sites
Retirement is one event that many people are ill prepared. An eye opening reminder is a survey from an online broker.
The latest cold-water reminder of this comes from a survey by online broker Scottrade (www.scottrade.com) and nonprofit investment adviser BetterInvesting (www.betterinvesting.org). More than half of the baby-boomer respondents reported being “very or extremely concerned” about retirement- possibly because a similar percentage said they didn’t have much of a nest egg. About a quarter of the 45-to 64-year old respondents have put away less than $25,000. Ouch!
How much do you need for retirement? Naturally, there are many factors such as lifestyle, health and gender. Many research studies have provided excellent reports on the correct amount and the best withdrawal rate. A “safe” rate of withdrawal we are for all our clients is 4%. Under this scenario there is a high probability your funds will last 30 years. Thus, if you need $100,000 per year. Keep in mind this is an example. All studies show you will need 85-90% of your preretirement income to maintain your lifestyle. You will need to pay your taxes from the $100,000, so, adjust accordingly.
If you need to draw $100,000 per year at a 4% withdrawal rate, then your account size will need to be $2,500,000. At a 4% withdrawal rate we assume someone will be investing, let’s say, in the S&P 500 which has averaged about 10% return since 1926. Subtract about 4-5% for inflation and the 4% withdrawal with allow that your monies can last for 30+ years.
Check out these sites for information and to do the calculations.