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Considering early retirement? It is something most people think about, but it can be expensive.
Let's look at Eric's three retirement scenarios. Depending on what age Eric chooses to retire – 55, 60 or 65, he will need to save the following amounts each month.
Assumptions
- Eric makes $38,000 per year (let's assume his salary never changes).
- Eric started to save at age 25.
- Eric earns an 6% rate of return.
- Eric puts 19% of his income away each year.
- Eric will live until he is 90.
- Inflation is 3%.
- Eric would like a retirement income of $26,600 in today's dollars
(assume no government income).
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