Question

Is $1 Million Enough to Retire?

It surely sounds like a lot, but once you do all the math, you might be sadly surprised.

This headline is from a recent popular business publication. The answer as to how much you need to retire can be calculated using the time value of money tools we have covered so far. Your post should describe in detail what steps you would take to calculate the amount needed. Remember to state what time value tools you should use. Once you have posted, you will be able to see what others have included in their steps. Your follow up post should compare your steps with those from someone else and what needs to change in either one to get the correct result.

Answer 1

FOR CALCLULATION OF TIME VALUE OF MONEY U CAN USE PRESENT VALUE OR FUTURE VALUE FORMULA . BUT BEFORE CALCULATE RETIREMENT AMOUNT , YOU SHOULD THINK ABOUT YOUR SAVING , YOUR AGE AND SO MANY OTHER THINGS.... LETS DISCUSS ABOUT THAT .

Use the present value concept now to give yourself a rough idea of the amount of money you need to have saved at the start of retirement to meet your retirement spending needs. You can do this calculation and planning regardless of your age, and the younger you start, the less money you'll need to save at any interest rate because of the power of interest that compounds over the years you hold your investments.

Start by adding up your anticipated annual expenses, subtract out your anticipated fixed sources of income such as Social Security, determine how long you think you will live, and then calculate the present value of that stream of expenses.

Compare that to what you now have saved, or what you think you'll have saved by your retirement date and you'll have a rough idea of whether you're on track or not for your savings goal.