Question 1045974: I am 43 years old now and I hope to retire at age 65 years old. I have 22 years before my retirement I want to have $ 2500.00 dollars every month to live off. I am about to set up a new retirement savings account that earns interest at 3% annual interest rate ( APR). I want to make monthly contributions to this account from now until I retire. The goal is to save enough money so that I will be able to withdraw the money I need each month without depleting my principal (in reality, I will probably deplete my principal gradually).How much money do I need to contribute to the account each month.
Answer by ankor@dixie-net.com(22740)   (Show Source):
You can put this solution on YOUR website! I am 43 years old now and I hope to retire at age 65 years old. I have 22 years before my retirement I want to have $ 2500.00 dollars every month to live off.
I am about to set up a new retirement savings account that earns interest at 3% annual interest rate ( APR). I want to make monthly contributions to this account from now until I retire.
The goal is to save enough money so that I will be able to withdraw the money I need each month without depleting my principal (in reality, I will probably deplete my principal gradually).
How much money do I need to contribute to the account each month.
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Some points to consider here. Will this be in a tax sheltered IRA where it accumulates tax free? (You only pay tax on it when you with draw it)
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To determine the amount choose a time period, for example it should last 30 yrs after you turn 65.
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To have an income of 2500 a month for 30 years, at 3%, you would need close to $600,000
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To have a tax sheltered IRA of that amount in 22 years, again at 3%, you would need a monthly payment of about $1600
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These are approximate, it gives you an idea of what you need to do.
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