For Mark Roberts’ Use: Have you ever wondered, if you started saving right now, how long it would take you to accumulate one million dollars in the bank?
Obviously, the answer to that question is going to depend upon a variety of factors. Your investment strategies and your rate of return will vary depending upon individual circumstances, but the bottom line is that it is entirely possible to set aside this sum of money for your retirement. Assume, for example, that you could put away $13,000 each year, starting at age 35. If your fictional account earned an average of 6 percent return, you could retire at about age 65 with a million dollars in your retirement fund.
Becoming a millionaire certainly sounds nice, but what would it actually mean for your retirement? Would the money last for the rest of your life? This is really the more important question. Once again, assuming some hypothetical parameters, pretend that your million dollars earns a rate of 5 percent return and you need to withdraw $75,000 dollars each year for living expenses. In that particular scenario, you would run out of money after 23 years of retirement.
Again, this is simply a hypothetical scenario, and interest rates, fees, and other specifics will vary from one situation to another. The point is to evaluate this information carefully with your financial advisor, and decide if the particular amount of money you want to save by retirement will really be enough to last throughout your retirement years.
To do this, you’ll need to evaluate your lifestyle, taxes, investment fees, and other potential expenses to determine the annual income you really require during retirement. Inflation is another big factor; keep in mind that in 30 years, your current income will not purchase as much as it does today. After considering all of these factors carefully, you’ll have some idea of whether saving a million dollars is an appropriate goal for your retirement.
