Many Americans are not doing the math on their retirement.
More than 75% of people planning to retire have not calculated how much money they will need before taking the leap, according to the 2020 study Four Pillars of New Retirement by investment company Edward Jones.
Fortunately, CNBC broke down the numbers and we can tell you how much you need to save to earn $ 50,000 of passive income each year in retirement.
First, some basic rules. The numbers assume you will be retiring at age 50, have no money saved now, and plan to save a substantial amount of your income to reach your goal.
To invest, we assume a 4% annual return when you are saving. We don’t take into account inflation, taxes, or any additional income you may get from Social Security and your 401 (k).
In retirement, we use the “4% rule,” which is a general principle that says you can comfortably withdraw 4% of your portfolio each year.
It is important to note that with the recent market volatility, there is a risk that you will have to reduce your spending percentage in the future.
Watch this video for a full breakdown of the numbers.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.