An email from the Dave Ramsey site dave ramsey investment calculator week included a link to Useful Tools. I clicked it and went over to the Investing Calculator.
I’ve seem similar calculators in the past and have run some numbers, but really didn’t pay close attention or change my investment amounts or anything based on the results. It’s better to underestimate and end up with more money at retirement, then to overestimate your rate of return and end up with less money. 2000 a month and 30 years for the time frame. 02 million dollars after 30 years.
Let’s return to the first example and say you’re a couple and are both 32 and want to retire when you are 62 and those numbers match what you will contribute and you’re starting today. 2 million in your retirement account to pull from. Let’s say you plan to live 30 additional years, to the age of 92. 66,667 to pull out per year for 30 years. Let’s say you’re both going to retire and no longer work when you hit 62 to keep it simple and we’ll assume the bulk of that is in a 401k account. To be prudent and not burden your children or relatives with having to care for you when the time comes, you will probably want to include a worst case scenario as well where you’d require assisted living for the last 5-10 years of your life, etc. That is currently around 40,000 per year per person!
I’d describe our personal situation as needing to play a bit of catchup to get where we want to be for retirement, based on the results above. There were also a few years that we had jobs that didn’t have 401k accounts or we just hadn’t gotten around to bumping our contribution level above whatever the minimum was. Becoming recently debt free has allowed us to focus on catching up. We recently funded a Roth IRA for both of us for last year and we will have our Roth IRAs fully funded each year going forward with regular contributions every other week. Dave recommends once you have your emergency fund fully funded and are debt free minus the house.