By Samuel Gonzalez
02 Jul 2024, 18:55 PM EDT
When we think of $500,000, it sounds like a lot of money. And while it is, if we add our golden years to the formula, might not be enough for retirementOn this occasion, we will reveal how much you would have to spend if you have that amount so that the money will last during your retirement.
Recently, Prudential Financial’s “Pulse of the American Retiree” report found that only 1 in 5 55-year-olds are adequately prepared with enough money to handle retirement. They report having saved $447,000 dollars or morewhich is roughly eight times the average salary in the United States.
This information partially coincides with another survey conducted by GOBankingRates in January, in which 26% of Americans indicated that I would need between $500,000 and $1 million to have a comfortable retirement.
It should be noted that most of us are not retirement specialists. It is one thing to think that $500,000 is a lot of money, and another thing to think that inflation will quickly absorb it and the math tells us something completely different.
According to financial experts, there is an unwritten rule known as the 4% rule, which recommends that that be the percentage of your withdrawals to cover a year of expensesThis rate also allows most of your money to remain invested in a retirement account, such as a 401(k) plan or individual retirement account (IRA).
If we take into account the 4% rule, You should withdraw $20,000 per yearIt is important to note that the rest should continue to be invested. According to experts, the returns could compensate for the withdrawal.
Other less conservative financial advisors extend this rule to 5% of the amount saved. If so, Your retirement could be up to $25,000 per year.
If we divide those amounts, the $20,000 and $25,000 dollars, between the months of the year, we would be talking about You would only have between $1,666.66 and $2,083.33 dollars per month.
?Is that enough for you? Well, that will depend on your spending habits.. To be honest, it’s a very tight figure, especially if we consider that there are many costs that are not included in youth, such as health care and medication expenses, which are common during retirement.
With this in mind, $500,000 doesn’t sound like much money anymore, right?
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