Not everyone wants to wait until they are 65 to retire.
Luckily, if you can save enough money now, you can fund your retirement by living off your returns without draining your nest egg.
NerdWallet crunched the numbers, and we can tell you how much you need to save now to safely get $50,000 of passive income every year in retirement, without taking a bite out of your principal.
First, some ground rules. The numbers assume you will retire at 45, have no money in savings now, and plan to save a substantial amount of your income to reach your goal.
For investing, we assume an annual 6% return when you are saving. We do not factor in inflation, taxes or any additional income you may get from Social Security and your 401(k).
In retirement, we use the “4% rule,” which is a general principle that says you can comfortably withdraw 4% of your portfolio every year.
It is important to note with the recent market volatility, there is a risk you’ll have to lower your spending percentage in the future.
Check out this video to get a full breakdown of the numbers.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
