How much you need to save for a comfortable retired life in the USA

Most Americans don't know how much extra money they'll need in retirement. Social Security benefits replace, on average, about 40% of the income you received before you retired. Everything else is your own investments and savings, which should cover 60%. We will tell you how much money you need to save and how to properly distribute these savings in order to live safely and comfortably in retirement in the USA.

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Some U.S. residents adhere to the so-called 4% rule, which means that in the first year after retirement, you must cash out only 4% of your retirement investment. After the first year, the amount may increase in order to keep up with the inflation rate. Ideally, you should remove even less than 4%, writes Fox Business.

The calculations are based on the assumption that people will save the same amount every year without increasing it, and that everyone will receive 7-percent return on their investments.

Fox Business Screenshot

This table is very useful - and here's why.

1. Helps you set realistic goals.

It’s worth not only looking at your life today and understanding how many savings you can make in the coming years. It’s important to be honest about calculating how much money you will need after retirement. Keep in mind that by then you may have added medical bills or want to travel.

Obviously, the sooner you start saving, the more confident you will be in your future. Plus, saving little by little over many years is easier than trying to build capital in the years leading up to retirement.

On the subject: Top Positions for Early Retirement

2. We remind you that you need to save a lot

If you have 600 000 dollars for retirement savings, by the time you retire it will turn into just 24 000 dollars in annual income (if you follow the aforementioned 4% rule).

In 2019, the average monthly pension was 1 461 dollars. This means that if you have accumulated 600 000 dollars and receive social benefits, your monthly income will be slightly less than 3500 dollars.

Most people cannot boast of 600 000 dollars saved on retirement right now.

3. The sooner you start, the better - no exceptions.

The sooner you start saving, the easier it will be to do it without a tangible impact on your current monthly budget.

On the subject: Four effective ways to defer additional $ 1000 in 2019 year

For example, if you want annual income after retirement to be 40 000 dollars, you will need to save 555 dollars a month starting from 30 years, or 3155 dollars a month if you start saving in 50 years.

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