Now let’s take a look at the amount of retirement funds needed for you to retire at age 65, with the assumption you will live to be 90-years old. As an example, we will assume in 2010 dollars that you need a modest $60,000 a year after taxes, and $75,000 before taxes. Therefore, your total retirement funds need will to be at least $1,875,000 over the 25 year period. If you factor inflation, the total needs to be $2,000,000. Many financial planners confirm that you need $2 to $2½ million to retire at age 65.
Let’s assume you have contributed as much as $5,000 to your IRA each year, and if you are over 50 years of age, $6,000. At a return of 8 percent on your money, you will retire with more than $600,000, assuming that your money has been invested wisely in your IRA. Unfortunately, this is an insufficient amount to retire comfortably. Obviously, you need other sources of wealth to achieve your retirement goal.
As you know, more companies today in the United States are contributing less and less to their employee’s retirement, making it necessary for employees to do more. Our federal government is recognizing this and is gradually increasing the amount that you may contribute annually to your IRA and other tax deferred pension plans. In my opinion, the annual contributions permitted for IRAs, Roth IRAs, 401(k)s and most other plans are still far too low to obtain the amount needed for a comfortable lifestyle until age 90.
Obviously, we need to have a comprehensive financial plan to develop our retirement income and wealth to the level needed for the remainder of our lives. The plan should:
· Have a nest egg for emergencies,
· Retire as much debt as you can to reduce interest cost and free up more funds for investment,
· Further, you should establish a real estate investment plan to generate monthly income and growth of wealth,
· Establish a diversified investment program that provides additional security, and
· Setup and invest in a Self-Directed tax deferred pension plan.
No comments:
Post a Comment