Let us look at some numbers.
Table 1 below shows the figures that you will need at the age of 60in your retirement savings.
| Age | At 60 | Amount needed-25 Years | Present Retirement Fund | Annual Contribution ( 6%) | Monthly |
| 50 | 155,374 | 3,089,067 | 1,000,000 | 294,352 | 24,531 |
| 40 | 254,717 | 5,031,834 | 500.000 | 166,952 | 13,913 |
| 30 | 414,907 | 8,196,325 | 80,000 | 108,476 | 9,040 |
The first column of the first row, shows the age. If you are 50 years of age this year and your expenditure per month is 8,000 dollars per month – you will have annual expenditure of 96,000 dollars.
The second column shows how much you will need annually at the age of 60 with annual inflation at 5%. It is 155,374.
Assuming this figure grows at 5% annually because of inflation from the time you are 60 for the next 25 years, you will need to have an amount of 3,089,067 to finance your retirement – as shown in the third column.
If you currently have a million dollars in your retirement fund as shown in column four, you will need to make an annual contribution of 294,342 to the retirement fund which has a 6% return rate. This means, your monthly contribution is 24,531.
The next two rows show for ages 40 and 30.
The figures above general and not specific. It assumes that your consumption remains the same and are only affected by inflation. This is just to give you an idea the amount of money is needed before you can retire. Your numbers will be different from what is shown here.
