How To Earn $50K A Year In Interest For Retirement

An “interest-only” retirement plan can fund your retirement without draining your savings, but you will need to save a lot of money to make it possible. NerdWallet crunched the numbers, and we can tell you how much you need to save every month, broken down by age, to get $50,000 every year in an “interest-only” retirement. Check out this video to learn how much you will need, in order to make it a reality.

Retirement usually involves giving up your annual salary, but you will still need an income to survive. While Social Security will cover a part of your budget, the rest of your money will most likely need to come from your savings and investments.

The median baby boomer’s 401(k) plan has a total balance of $69,900, according to Fidelity. Assuming they withdraw 3% of their savings per year, they would be left with a total of less than $2,100 to spend.

If you want bigger drawdowns, you’ll need to save up a much larger nest egg before you retire. NerdWallet crunched the numbers, and we can tell you how much you need to save now to get $50,000 every year in retirement, without taking a bite out of your principal.

First, some ground rules. The numbers assume you will retire at 65 and have no money in savings now. For investing, we assume an annual 6% return when you are saving and a more conservative 3% rate for your “interest-only” retirement. We do not factor in inflation, taxes or any additional income you may get from Social Security.


About CNBC Make It.: CNBC Make It. is a new section of CNBC dedicated to making you smarter about managing your business, career, and money.

Connect with CNBC Make It. Online

#CNBC
#CNBCMakeIt

How To Earn $50K A Year In Interest For Retirement

[lindaspengler]

Retirement planning is ideally a life-long process. You can start at any time, but it works best if you factor it into your financial planning from the beginning. That's the best way to ensure a safe, secure—and fun—retirement.

[bobbyhilzen]

Nice breakdown. If I could change the past, I would have started investing right when I turned 18... Staring at 18 (instead of 25), if you invested 837/month, you'd end up with almost an extra million dollars by 65 using your assumptions (~$2.6M).

[gogrick]

It's like the old Steve Martin joke; "How to be a millionaire and never pay taxes! First....get a million

[moneybee]

"Compound interest is the 8th wonder of the world... He who understands it, earns it; he who doesn't, pays it." - *Albert Einstein* . Love the breakdown of the investment amounts for the different age groups!

[ImVeryBrad]

My plan. I save 15k per year. Retirement will be GG

[isaacannanjr]

"Social security" 😂 *Laughs in millennial

[enigmaic]

Not accounting for inflation is a huge miss here. For example, if we look at historical inflation over the last 40 years, a person making $16k a year in 1980 had the same buying power as a person making $50k today. This is more than 3x the loss of buying power.

This means that if you currently live on a $50k salary, and want to maintain that level of lifestyle, you’d need to earn upwards of $156k per year in 2060 when you retire to remain at the same level. Otherwise it would be like trying to live off $16k a year today. Definitely possible but a far cry away from a $50k lifestyle.

[JonathanSorunke]

It’s wild to see how much of an impact compounding interest has on your finances! If this doesn’t encourage you to save money then I don’t know what will.

[randym]

Very simple compounding lesson. $50, 000 in 2061 will not be what it seems today. It would be more helpful if you would do an example with inflation, and assume a liner career trajectory (ages 20-65, 20% promotion every 10 years, 3% salary increase other years, and just start at $40k or something reasonable).

Same with that $1M video from a week ago w/ a lifetime fixed salary of $50k....I get these need to be simple to digest. But these are very simple.

The more important video would be: "How To Earn the equivalent of $50K in todays dollars A Year In Interest For Retirement"

I love this channel. Including millennial money. Thanks for bringing transparency to our situations.

[mitchellgriffith]

Good simple video. It's wise to plan to not get much from social security. I'll react and go a bit deeper on the simple math. That $50k could result in a very different amount of income hitting your pockets after taxes depending on how you allocate your money (IRAs, 401ks, brokerage accounts) :)

[cienna]

That was the video? Who was in charge of the content

[luisrobles]

This is why I invest in dividend stocks. My dividends should exceed my SSI by the time I retire.

[alexismiles]

I went from stressing over divorce to becoming a successful investor in the marketplace. I have been a passive trader since 5 years ago till now, owning 3 homes and receiving about $60k monthly dividends. I would say that the greatest determinant of your destiny lies in how you react to things and not in the things themselves... great video!

[adedayoologunde]

Between housing costs, student loans, car costs, etc, what kind of 25 y/o has $837 leftover money every month for retirement alone?

[thecrazed]

Is the $1.5MM needed to retire purely contributions or the total balance of retirement account which includes contributions and growth?

[dayvidsdays]

Call me cautious. I think having more money in your retirement is much needed. Like the video mentioned, there can be other factors or incidents that pop up that changes the calculation.

[JadeTrading]

Oh my god. I love this animation video.🤩

[filipinomeknow]

Wow, we're still on the notion that 25 year olds plan to retire at 65? Many of the younger generations have moved on to retiring at 40!

[neofthem]

Start maxing 401k and Roth IRA at 25 and you’re set.

[toniwonkanobi]

These videos both make me feel good and terrified about my retirement strategy. I'm maxing my 401(k) and IRA every year, and we have savings obviously. I think I'll have enough, but it's still stressful.