How much money will you need and are you on the right track?

Here are some simple formulas that you can use to determine if you are building wealth and how much money you will need to retire on.  You can find more complex and to the penny formulas and calculations, but this will you give you a quick way to see where you are at now.

Your age times your pretax annual household income from all sources minus any inheritances.  Divide by ten and this is what your net worth should be now.

40 year old making $70,000/year in annual household income=$2,800,000, divided by 10=$280,000.  This is what his net worth should be right now.  Most people aren't even close to this figure.

How much money will you need invested and saved to live on in retirement?  You will need approximately 25 times your future annual income requirements saved before you retire.  That is approximately $2,500,000 for every $100,000 you want to retire on in pre-tax income.  Above and beyond any social security or pensions you expect to receive.  

As you can see, unless you want to work until you die, you can't get there working for someone else.  You need to develop recurring income streams to help you get there.  How many part-time jobs can someone work?  When will you say enough is enough and stop the insanity and start looking for other solutions to your problems?

No comments:

Post a Comment