Retirement Calculations

Physician's Money Digest, May 15 2004, Volume 11, Issue 9


Figuring out how much money youneed to finance a comfortable retirementcan affect your spending and savinghabits. Here's some data from T. RowePrice ( saving for your golden years. Mostretirement experts figure that you'll need70% of your annual income to maintainyour lifestyle in retirement, so you shouldfirst estimate how much you already havesaved in terms of your annual income.That number, combined with your age,tells you how much you need to save toyield 35% of your current annual incomeafter you retire, assuming that you canmake up the shortfall from othersources. Assuming an 8%annual return, a 40-year-old doctor withtwice their annual income already sockedaway would need to save just 3% of thatincome each year from now to retirement.At age 55, however, you wouldhave to save more than a third of yourincome every year to reach your goal.