As you get closer to retirement, you may realize that you have plenty of money to sustain you during your golden years. Or you might discover that you’ve fallen short.
Either way, you’ve probably determined that you’d like to have a certain amount of cash to live on every year, whether it comes from savings, Social Security or a part-time job.
For those looking at specific retirement income numbers, here are some ideas on how to earn $50,000, $70,000 and $100,000 per year, in retirement.
How Much Savings Will Earn $50K, $70K or $100K in Interest Per Year?
To cut to the chase, if you want your interest to earn $50,000, $70,000 or $100,000 per year, you’ll need to have approximately $1.25 million to $2.5 million in savings or retirement accounts. If you’re aiming for somewhere in the middle, like $70,000, you’d want to have $1.75 million saved.
These totals assume you’d earn 4% interest every year, which would allow you to withdraw funds without sacrificing the principal when following the popular 4% rule. This may be achievable with various high-yield savings accounts in today’s interest rate environment. Remember, though, that certain investments can yield a higher return over the long term, but they carry greater risk than something like a certificate of deposit or a high-yield savings account.
If you aren’t on track to save that much and you’re starting to panic, keep in mind that this doesn’t include what you would make from your Social Security check. Even if you aren’t able to save between $1.25 million to $2.5 million, if you’re somewhere near that ballpark, you could still possibly earn $50,000 to $100,000 in income during your retirement, between the interest you earn, your Social Security check and other resources.
Still, the longer you wait to save money, the harder this gets. If, for instance, you’re 45 years old and you want to retire by 65, you’d need to save $50,000 per year to save $1 million before retirement. That translates to $4,166 a month.
The good news is that amount does not include any interest or investment return that could boost your retirement savings.
Try to Put Away 10% to 15% of Your Income Toward Retirement
Putting 10% to 15% of your income into a retirement fund can be a difficult task, but that is the amount that financial advisors tend to recommend to meet your retirement goals.You’ll want to try to save and invest as much as possible.
“If you’re early in your career earning, say, $50,000 a year salary, and your retirement goal is $1.5 million, then it’s reasonable to invest $625 a month, which is about 15% of every paycheck,” says Pam Krueger, founder and CEO of Wealthramp in Tiburon, California. “If you invest that money in low-cost (exchange-traded funds) and market grows at an average of 6.5% a year, you should be right on track.”
Diversify Your Investments and Consider Taxes
It’s important that savers embrace investing and not simply saving, says Robert Johnson, professor of finance at Heider College of Business at Creighton University in Omaha, Nebraska.
“That is, the money you save needs to be invested in assets that will grow over time,” Johnson says.
“Think of your investments like a well-balanced diet,” says Reagan Bonlie, founder of Nudge Money, a financial wellness and planning app, in New York City. “Just as you wouldn’t eat only one type of food, you shouldn’t put all your money in one type of investment. A mix of stocks, bonds, real estate and other assets can help balance risk and reward.”
Bonlie adds, “As you get closer to retirement, consider shifting towards more secure investments.” He also recommends: “It’s always a good idea to chat with a financial advisor to get a strategy that fits you best.”
You also want to think about taxes when planning for retirement income. That’s because, whether it happens before or after retirement, the IRS is going to want some of your money.
“There are special retirement accounts that offer tax benefits,” Bonlie says, referring to employee-sponsored plans such as 401(k)s, 403(b)s or a 457s. “These can be a game-changer for your savings, allowing your money to grow more efficiently over time. If you’re a bit older, there are also catch-up contributions you can make, which can give your savings an extra boost.”
Make an Educated Guess on Your Social Security Check
If you’re aiming for $50,000, $70,000 or $100,000 in retirement income, it’s wise to know how Social Security will help.
Instead of wondering what your Social Security check might look like and hoping for the best, get a sense of how much you’re going to receive.
The Social Security Administration has a quick calculator where you can plug in information such as your birthdate, current earnings and future retirement date. It’ll give you a benefit estimate in today’s dollar or inflated future dollars (you can choose which version you want). It’s only an estimate, but it can help.
You can also create a my Social Security account, even if you aren’t close to retiring, where you can also estimate your future benefits.
If you aren’t retiring for a couple of decades, you’ll want to take any projection with a grain of salt. It’s still an estimate. But if you see that you’re going to get $2,200 a month, that’s $26,400 a year, and you would know that you’re facing a $23,600 gap to make up — if you were aiming to make at least $50,000 a year.
From there, you’d just need to determine how much money you saved for retirement, if any, and if it can help make up that shortfall.
Good or bad, it can be motivating to see how much money you’re likely to make each month from Social Security.
[Read: The Future of Social Security.]
Consider a Part-Time Job
Once you start receiving Social Security benefits, you can still work without your benefits being affected. That’s provided you are the full retirement age, which is 67, if you were born in 1960 or later. If you’re collecting Social Security benefits before your full retirement age, you can work part-time, but there is a limit to how much you can earn and still get your full benefits.
At any rate, it may not be what you imagined for your retirement — working. But not every part-time job is unglamorous or requires you to be on your feet every minute.
A few part-time retirement jobs that you might want to consider:
— Substitute teaching. If you meet your state’s educational requirements, such as having a Bachelor’s degree, consider this part-time retirement job option. If you love interacting with young people, this could be a dream part-time job.
— Dog sitting or babysitting. If you’re able to earn some extra money hanging out in your home or somebody else’s, with animals and hopefully well-mannered kids, what’s not to like? Chances are, somebody in your circle on social media knows somebody who could use a regular sitter.
— Your previous job, only part-time. You won’t have to learn a new skill to take on this part-time gig. You won’t have to start over. You’re just doing less of what you did.
— Consulting. This is similar to part-time work in your previous industry, only it would be on an as-needed basis. Certain jobs lend themselves well to this. If you worked for a large corporation, for instance, maybe you have a special skill set, and yourability to train new workers would be invaluable. Or maybe there are special projects that your employer would like to hand to a contract worker who knows the company and brand intimately.
— Low-stress retail work. Retail can be grueling, especially if you’re a cashier at a busy supermarket, for instance. But maybe the idea of working at a bookstore or another chill spot sounds like a good match.
Don’t Get Too Caught up in the Numbers
Yes, it would be great to have $1.25 million or more saved, so you can shoot for earning $50,000, $70,000 or $100,000 a year without having to worry about Social Security or getting a part-time job.
At the same time, Krueger says, “There’s no real ‘magic number’ of dollars you’ll accumulate over a lifetime of saving and investing because it’s a moving target.”
For instance, earning $100,000 solely from interest a year sounds great today, but if you retire in 2050, and if inflation has skyrocketed, you may need more.
In any case, the important thing is to be thinking about your finances throughout your life.
“While an early start is fantastic, it’s never too late to make smart financial decisions,” Bonlie stresses. “Everyone’s journey is unique, and with the right guidance and determination, you can work towards a secure retirement at any age.”
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How to Earn $50K, $70K and $100K Per Year in Retirement originally appeared on usnews.com
