Planning for Retirement
A recent video by CNN money suggests that a good benchmark for preparing for retirement is to set a goal of having one’s investments reach 5 times that of their salary by the age of 40. So, if one were making $65,000 a year, the goal would be to have $325,000 in investments.
Additionally, they recommend setting a goal for age 50 to have investments worth 10 times that of one’s salary and about 20 times one’s salary by 60. Assuming one can achieve a 7% return on their investments, they should see a doubling of their money every 10 years. Under this method CNN claims that at 65 one could begin withdrawing 4% of their investments each year permitting them to take home 92% of their previous salary, a very comfortable amount to live on.
Financial planning is never an exact science – during 2009 it was not uncommon for many people at age 40 to be unemployed, so this benchmark would be of little assistance to them in planning for the future. Likewise, someone making minimum wage at age 40 will struggle to save much for retirement while someone making 6 figures would be perfectly fine not having anything saved at age 40.
The most important concept is that one plan. With the new year approaching, now is a great time to sit down and plan for the next decade, when and what to save, and how aggressively you’re going to need to save in order to be comfortable in your retirement years.
photo credit: anotherloverholenyourhead
Tags: investments, savings
28.Dec.09 
Financial Planning 
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