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Many Americans aren’t doing the math on their retirement.
More than 75% of people planning to retire haven’t calculated how much money they will need before taking the leap, according to the 2020 Four Pillars of the New Retirement study by investment company Edward Jones.
Luckily, CNBC crunched the numbers, and we can tell you how much you need to save to get $50,000 of passive income every year in retirement.
First, some ground rules. The numbers assume you will retire at 50, have no money in savings now and plan to put away a substantial amount of your 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 that 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.
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