Study: You Need 22 Times Your Desired Annual Income in Retirement Savings

Tuesday, 04 Feb 2014 07:05 AM

By Dan Weil

  Comment  |
   Contact Us  |
|  A   A  
  Copy Shortlink
How much money do you need to save for your retirement?

Try 22 times the annual income you want during your golden years, according to a recent study in the Financial Analysts Journal by Stephen Sexauer, chief investment officer for U.S. multi-asset management at Allianz Global Investors, and Laurence Siegel, who heads the CFA Institute Research Foundation.

That means if you want annual income of $100,000 (excluding Social Security), you must have $2.2 million in retirement savings, notes Jason Zweig, who discusses the duo's findings in his Wall Street Journal column.

Editor's Note: Pastor Uses ‘Biblical Money Code’ to Help His Father Retire

He says the 22 figure exceeds previous estimates, "but it offers near-certainty of hitting your target."

To make sure that your retirement plan works, "you would consistently fund it with ample savings, invest patiently in low-risk assets and structure the payouts to provide steady income during a long retirement," Zweig writes.

And how should you invest your savings? Sexauer and Siegel recommend placing the majority in Treasury inflation-protected securities (TIPS) and the rest in a deferred life annuity for secure payouts.

Meanwhile, a study by Wade Pfau, a professor of retirement income at The American College in Bryn Mawr, Pa., finds that you must save at least 16.6 percent of your salary each year to finance a comfortable retirement, Yahoo reports.

Pfau assumes that you want to replace 50 percent of your pre-retirement income, that you will save and invest for 30 years and will spend 30 years in retirement. He also assumes a 60 percent weighting in stocks and 40 percent in bonds.

Editor's Note: Warren Buffett’s Secret to Wealth — The Bible?

Related Stories:

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact Us  |
  Copy Shortlink

Retype Email:
Zip Code:
Follow Newsmax
Google Plus
You May Also Like

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved