ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How Much Will I Need to Retire (Part 2)

Updated on September 2, 2020
Art West profile image

After 43 years as an Accounts Payable Manager, I have learned a lot about finances and how to handle money.

How much will I need to retire (part 2)

In my last Hub I showed how I came up with the figure of $50,000 a year for retirement income. I said that the last figure that I saw for that average household income in the United States was $50,000. I realize that figure is the gross income, however, since I have already started using a net income of $50,000 I will stay with that number.

I believe that Mutual Funds are the best investment available. You can invest in Mutual Funds individually, through IRA's, 401k's or other retirement savings accounts. There are several Mutual Funds that have averaged 10-12% growth over the life of the fund. What you want to look for are funds that have been around for at least 10 years, the longer they have been around the better it will be. Just because a fund has averaged 12% growth does not mean that it has grown by 12% every year. It may have grown 36% one year and lost 12% the next year. Because some funds may fluctuate, you want to find funds that have had growth in at least 70% of the years that they have been around.

For those who may question the possibility of finding such funds, as I am writing this Hub I have next to me printouts from 2 funds. One began in 1967 and has averaged growth in 75% of its life. The growth average of the fund is 12.41%. There is also another fund that began in 1952 that has had growth in 80% of its years with a growth rate of 12.85% over the life of the fund.


Finding A Growth Rate To Use When Calculating Investment Income

We will use a 10% growth rate because it will be easier to calculate. You may say this will be simple, to get $50,000 you need to have $500,000 invested. Sorry but it is not that easy. You have to take taxes and inflation into consideration. Since inflation averages around 4%, you should only take out 6% of the balance of your investment. That will mean your investment base will grow by 4% per year to keep up with inflation.

Next you have to deal with taxes. For this example I will use 15% federal and 5% state and local taxes. That means for that $500,000 investment you will only be taking out $30,000 which is $500,000 at 6%. The government will then take 20% of that $30,000 so you will be left with $24,000. Obviously that is short of the $50,000 we are shooting for. Doubling that $500,000 will only get us to $48,000. We will actually need 1.05 MILLION dollars to net slightly over $50,000 per year.

My next article will look at how you can get in to position to achieve the goal of saving 1.05 million dollars.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2009 Art West

working

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://corp.maven.io/privacy-policy

Show Details
Necessary
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Features
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Marketing
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Statistics
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)