How much money you should have saved for retirement by 30, 35 and 40

Budgeting on a fixed-income can be stressful.

Many Americans say they’ll have financial peace of mind when they have enough money to live comfortably the rest of their lives.

Around 75% of retirees say that uncertainty over having a fully funded retirement is their biggest fiscal stressor, according to the 2020 Four Pillars of the New Retirement study by investment company Edward Jones.

Retiring early means you’ll need to fund decades of your life without a steady salary to bolster your budget.

Luckily, if you can save enough money now, you can pay for your retirement by living off returns.     

CNBC crunched the numbers, and we can tell you how much you need to save now to safely get $40,000 of passive income every year in retirement. 

First, some ground rules. The numbers assume you will retire at 45, have no money in savings now and plan to save a substantial amount of income to reach your goal. 

For investing, we assume an annual 4% return when you are saving. We do not factor in 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 every year. 

It is important to note with the recent market volatility, there is a risk you’ll have to lower your spending percentage in the future.

Check out this video to get a full breakdown of the numbers.

More from Invest in You:

How Walmart and other big companies are trying to recruit more teenage employees
Americans are more in debt than ever and experts say ‘money disorders’ may be to blame
How much money do you need to retire? Start with $1.7 million

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

Source link




Southern California, San Joaquin Valley trigger stay-at-home order

A waitress serves guests as people dine outdoors in Pasadena, California, the only city in Los Angeles County still allowing that service on...

Whitty warns next few weeks will be the worst

A patient is brought into the Royal London Hospital, in London during England's third national lockdown to curb the spread of coronavirus, Sun...

Tesla is dropping again, bringing three-day loss to 16%

Elon MuskJim Watson | AFP | Getty ImagesTesla shares slid more than 6% during premarket trading on Thursday, building on the stock's recent...

Pro-Trump rioters intended to kill Pence and members of Congress

Pro-Trump supporters storm the U.S. Capitol following a rally with President Donald Trump on January 6, 2021 in Washington, DC.Samuel Corum | Getty...

Casinos should have a huge year in 2021, Jim Cramer says

Casino stocks are rallying as investors anticipate a rebound in travel and less rocky trade relations between the U.S. and China in the...