Calculate Retirement Savings Goals Savings Rate for Various Retirement Needs and Starting Ages - The chart below provides examples of required retirement saving rate, or percentage of your income, that you need to put aside for retirement. Amount Needed at Average Career Required Retirement Savings Rate to Reach Retirement Income Retirement Goala Start Saving at Start Saving at Start Saving at Age 25 Age 35 Age 45 $178,250 $23,000 7.2% 12.7% 24.7% $537,500 $50,000 10.0% 17.6% 34.3% $936,000 $78,000 11.2% 19.7% 38.3% $1,620,000 $120,000 12.6% 22.1% 43.0% 2. Sue earns $45,000 a year and is 40 years old. She expects as she continues to advance in her career that her lifetime earnings could grow to average about $65,000 a year. She would like to retire by age 55 if possible but definitely before age 60. Using the chart above, estimate and explain Sue's retirement savings rate necessary to achieve her goal. 3. Your friend Manuel is 20 years old and wants to begin taking steps to prepare for retirement right now. Manuel has a limited budget that does not allow a maximum contribution to a defined contribution plan, but he thinks he can save $5,500 per year into a plan. Which retirement plan type would you recommend that he utilize based on his limited income and contributions? How much could Manuel accumulate at age 55 if he starts saving consistently now at age 20 and can earn a 9% annualized rate of return on his investments? How much could the account be worth if he continues contributing until he reaches age 65? Calculate Retirement Savings Goals Savings Rate for Various Retirement Needs and Starting Ages - The chart below provides examples of required retirement saving rate, or percentage of your income, that you need to put aside for retirement. Amount Needed at Average Career Required Retirement Savings Rate to Reach Retirement Income Retirement Goala Start Saving at Start Saving at Start Saving at Age 25 Age 35 Age 45 $178,250 $23,000 7.2% 12.7% 24.7% $537,500 $50,000 10.0% 17.6% 34.3% $936,000 $78,000 11.2% 19.7% 38.3% $1,620,000 $120,000 12.6% 22.1% 43.0% 2. Sue earns $45,000 a year and is 40 years old. She expects as she continues to advance in her career that her lifetime earnings could grow to average about $65,000 a year. She would like to retire by age 55 if possible but definitely before age 60. Using the chart above, estimate and explain Sue's retirement savings rate necessary to achieve her goal. 3. Your friend Manuel is 20 years old and wants to begin taking steps to prepare for retirement right now. Manuel has a limited budget that does not allow a maximum contribution to a defined contribution plan, but he thinks he can save $5,500 per year into a plan. Which retirement plan type would you recommend that he utilize based on his limited income and contributions? How much could Manuel accumulate at age 55 if he starts saving consistently now at age 20 and can earn a 9% annualized rate of return on his investments? How much could the account be worth if he continues contributing until he reaches age 65
