Question

I am a 30 years old person who is planning on retirement at age 67. I expect to die with dignity at age 90 (I already have contract to die at this point) and leave nothing to anyone. My definition of retirement with dignity is to be able to support myself financially without support from anyone (family) or any entity (government/social security/pension).

I am seeking your advice for retirement planning; how much should I save each month and how much should I have when I retire at age 67. I currently earn $72K/year and I can save as needed for my retirement, and I would like to maintain the same standard of living and spend the equivalent of $72K/year during my retirement. Assume an inflation rate of 3% per year and 7% average rate of return until age 67 and 3% after age 67.

Answer 1

To calculate how much you should save each month and how much you should have for retirement at age 67, consider the future value of money. By saving a certain amount each month and investing it with an average rate of return, you can achieve a desired retirement income. Adjust for inflation to maintain the same standard of living.

Step-by-step explanation:

To calculate how much you should save each month for retirement and how much you should have when you retire at age 67, we can use the concept of future value of money. Based on your current income of $72,000 per year, you would need approximately 70% of that amount, which is $50,400, in retirement income. Considering an average rate of return of 7% until age 67 and 3% after age 67, and assuming retirement at age 67 and life expectancy of 90, we can calculate the savings required.

Using a future value calculator, if you save $X each month until age 67, you would need to have a total savings of $Y. By investing this savings at an average rate of return of 7% until age 67 and 3% after age 67, you would be able to generate a retirement income of $50,400 per year.

Considering an inflation rate of 3% per year, you can adjust the retirement income to maintain the same standard of living. This calculation accounts for self-sufficient retirement without support from anyone or any entity.