Monthly Archives: July 2020

How to retire comfortably

How to retire comfortably

 

One life. One chance. Unfortunately, that also means you only get one chance to make sure you live a happy comfortable retirement.

 

You see, it is your choice whether you want to spend your retirement working as a greeter at Walmart, or if you would rather spend it traveling.

 

I’m going to show you how differences in your savings rate determines the success of your retirement.

 

I’ll look at three examples. The first individual, Joe, will save 5% of their after-tax earnings. The second individual, Barb, will save 10% of their after-tax earnings. Finally, the third individual Sam, will save 20% of their after-tax earnings. Let’s assume that all three of them earn $60,000 per year after tax, start saving at 30 years old, retire at 65, and live until age 90. We will also assume they all earn 6% on their investments while working and 4% on their investments in retirement.

 

Joe only saves 5% of his after-tax earnings, or $250 per month. By saving $250 per month for 35 years Joe manages to save up $345,073. He expects CPP of $1,175.83 every month and OAS of $613.53. Joe can also expect to be able to withdraw $1,800 per month from his investments until he passes at age 90. This sets Joe up for a gross retirement income of $43,072 every year.

 

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One simple trick to nearly quadruple your money

1 trick to nearly quadruple your money

 

What if you could go from having $244,815 over 30 years to $906,222 over 30 years using one simple trick? You don’t need to earn a bunch more on investments, in fact you don’t even need to change your investments. All you need to do is increase your savings rate year after year.

 

You see, if you were 30 years old today and saved $250 per month for the next 30 years, all while earning 6% on your investments, you would end up with $244,815 in your investment account. Now, there is nothing wrong with that, but $906,222 sounds a lot better to me.

 

 

savings comparison

 

 

Here’s how you do it.

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