While the thought of adequately funding your retirement may be daunting, if you start planning now, you’ll be thankful later. It may also not be as difficult as you think.
Retirement usually involves replacing your one-time annual salary from a workplace with other sources of income to maintain your current lifestyle. While Social Security may cover part of your budget, the rest of your money will most likely have to come from your savings and investments.
CNBC crunched the numbers, and we can tell you how much you need to save now to get $70,000 in retirement each year — without taking a bite out of your principal.
First, there are some basic rules. The figures assume that you retire at age 65 and that you currently have no savings.
Financial advisors typically recommend gradually shifting the mix of investments in your portfolio to become more conservative as you approach retirement. But even when you retire, you probably still have a mix of stocks and bonds, as well as cash. For investing, we assume a conservative annual return of 6% when you save and an even more conservative rate of 3% during your “interest-only” retirement.
We also don’t factor in inflation, taxes, or any additional income you receive from Social Security or your 401(k) plan.
Watch the video above for more information.
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