For your retirement to comfortably last the decades you can expect to live, you need to start saving now.
How much will you need to retire?
Well, in 2014, Matthew Illian, a member of the Investment Committee at Marotta Wealth Management, Inc., wrote that “Someone retiring now in 2014 with $1 million at age 65 can safely withdraw $43,600 a year. However, [because of inflation], today’s 20-year-olds will need over $7 million to have that same lifestyle when they retire. In 1970, they would only have needed $166,000 in retirement to have a similar purchasing power for the rest of their life.”
If that’s the the case, then a 25-year-old with a starting salary of $50,000 would have to save around 14.65 percent of their salary throughout their career. The problem with that scenario is that Illian determined this retirement figure if the average inflation rate over the next 45 years will be 4.5 percent. Currently, the inflation is around 1.4 percent and hasn’t been close to 4.5 percent since 2008.
That still doesn’t mean that millennials should only plan to retire with a million. As Robert Powell reports in USA Today “Older Millennials -- those born in the early 1980s -- will need about $1.8 million salted away to maintain their standard of living in retirement while younger millennials -- those born in the late 1990s -- will need upwards of $2.5 million.”
There are several reasons why millennials need this much money set aside. Read more: click image or title.
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