Apr
16
im looking to start investing money for retirement question.?
Byhow much money I put aside each month to 20 years in retirement. talk to me, I invest invest in. any help would be welcome. I live in Mississippi and my income is about 90,000 per year.
7 Comments
April 16th, 2010 at 3:20 am
You need to put away as much as possible. You can retire at any age, the only question is will you be able to live comfortably on your retirement income. The more you put away, the better off you will be.
April 16th, 2010 at 3:29 am
In order to determine how much you need for retirement, there are a couple of things that you need to decide. First of all, how long until retirement? You have specified this at 20 years. Also, how much income do you want at retirement? Finally, what returns do you expect on your money before retirement and how much do you expect it to return while you are in retirement?
You should expect to be able to live on the returns that your nest egg generates once you retire. Therefore if you expect to return 10% average per year once in retirement you should have 10 times the annual income you need in your nest egg. That way you can leave the nest egg alone and just take the returns.
You will also need to consider inflation, and taxes if this is not a tax sheltered investment. A Roth IRA would almost certainly be a good idea. You can put after tax dollars into this and then draw from it completely tax free at retirement. Since your retirement is 20 years out, you should consider investing a good portion in stock mutual funds depending on your risk tolerance.
As for how much to invest? If you invested around $500 per month for the next 20 years at around 12% average returns, you would have about $550,000. If this continued to return 12% after and you drew on around 9% to leave 3% to account for inflation, you would have an income of about $50,000 per year. This would be completely tax free if invested in a Roth IRA.
Your actual figures will depend on your investment objectives. Good luck!
Hope this helps!
April 16th, 2010 at 4:21 am
Hard to say because we don’t know all your particulars (and don’t want to).
http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
Here’s a retirement calculator that will help you start figuring what you need to put away.
April 16th, 2010 at 4:27 am
Start by adding the maximum to your retirement plan at work. After you max that out, invest the maximum in a Roth IRA each year. If you still have extra investable money after that, put it into a non-qualified account. I would use mutual funds, but you could also go with an annuity in order to defer paying the taxes until you retire.
Good luck
April 16th, 2010 at 4:34 am
There are a myriad of questions that a qualified financial advisor would need answers from you before venturing a guess. I know, I’ve been doing this for over 30 years. In addition, the real question is twofold: 1. How much can you afford to set aside and 2. How much do you want to have for a comfortable retirement.
From these 2 questions arises loads of questions (all necessary) regarding investment knowledge, risk tolerance, discipline, and willingness to manage your funds.
You see, a good advisor will not manage your money, its unethical, potential conflicts of interest. We usually charge an hourly rate of $100 -$150 per hour. Development of a plan takes 6 -8 hours. Its always suggested that there is a follow up each quarter to review, revise and Q & A. This is how a good planner gets most of his referrals.
Having said all that, the key is to avoid advice where there is a potential conflict of interest. Your investment advisor may or may not be the best choice. If an independent FA sounds a bit pricey, the next best thing is one of the big investment houses like T Rowe Price, Vanguard, Fidelity etc., all offer very good retirement services/planning at a nominal fee and in some cases its free. The only difference is you have to do most of the leg work, but their questionaires are about as good as ours.
April 16th, 2010 at 5:27 am
if you are just starting now and you are in your 40s save 20% minimum. Do use the internet calculators, and do consider that most of the folks making the calculators have some interest in you increasing your investments.
so google “retirement calculator” with a grain of salt
April 16th, 2010 at 6:24 am
Check http://www.retirement-news.com “Retirement Calculator” section. It has a lot of tools, which help you estimate your retirement income. Good luck.