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How much cash does it take to retire comfortably? A lot. Social
Security payments provide subsistence-level income, but not much more. The following table
illustrates the levels of cash that must be saved at the age of retirement in order to
earn various levels of income without depleting one's principle. Income levels
vary depending upon the amount of cash saved and the prevailing rate of interest
at the time of retirement. If these hypothetical interest rates seem low,
it is important to note that they are generally reflective or today's
historically low interest rates.
| Cash Saved
Upon Retirement |
Interest
Income if Retirement Funds Are Invested at a 3% After-tax rate |
Interest
Income if Retirement Funds Are Invested at a 4.5% After-tax rate |
Interest
Income if Retirement Funds Are Invested at a 6% After-tax rate |
| $250,000 |
$7,500 / yr. ($625 /
mo.) |
$11,250 / yr. ($937 / mo.) |
$15,000 / yr. ($1,250 per mo.) |
| $500,000 |
$15,000 / yr. ($1,250 / mo.) |
$22,500 / yr. ($1,875 / mo.) |
$30,000 / yr. ($2,500 / mo.) |
| $750,000 |
$22,500 / yr. ($1,875 / mo.) |
$33,750 / yr. ($2,812 / mo.) |
$45,000 / yr. ($3,750 / mo.) |
| $1,000,000 |
$30,000 / yr. ($2,500 / mo.) |
$45,000 / yr. ($3,750 / mo.) |
$60,000 / yr. ($5,000 / mo.) |
| $1,250,000 |
$37,500 / yr. ($3,125 / mo.) |
$56,250 / yr. ($4,687 / mo.) |
$75,000 / yr. ($6,250 / mo.) |
| $1,500,000 |
$45,000 / yr. ($3,750 / mo.) |
$67,500 / yr. ($5,625 / mo.) |
$90,000 / yr. ($7,500 / mo.) |
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