Establishing your own Financial Legacy
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According to the website The Nest (Links to an external site.), if you put your money into an account or investment that pays 1 percent annual interest, you’ll need to save $28,465 a year to reach $1 million in 30 years.
· At 2 percent annual interest, you’ll need about $24,170 a year;
· at 3 percent, about $20,410 a year;
· at 4 percent, about $17,145 a year;
· at 5 percent, about $14,335 yearly;
· at 6 percent, about $11,935 yearly.
1- Given that information, list a retirement savings goal (such as 100,000, 1 million, 10 million, etc.)
2- Next, list your current age (if you are comfortable doing so) and the age you think you will want to retire (Most individuals retire between the ages of 62-67 in order to take advantage of social security benefits; you do not have to choose any of those ages, however).
3- Considering the Rule of 72 (see this week’s Instructional Materials) determine and list how much savings per month and year you will need to make your saving goal a reality at a 5 percent interest rate.
For example, a 32-year-old with a retirement savings goal of 1 million will need to save $14,335 yearly or $1,194 per month at an interest rate of 5 percent to reach 1 million by a retirement age of 62.