How much would a 33 year old need to retire?

If you are 33, and you want to retire tomorrow, how much money would you need?

Public Comments

1. Okay so let's just say you plan to live until you're 80. That's 47 years from now. You plan not to leave a cent in your account to your family. Pratically, lets say you open an account which will give you a 4% interest rate... Let's say you need 40,000 every year to keep up with your bills and such. (Medically, you may need more but, lets assume you have insurance ect.) Based on all this you'd need to invest $841,71.45 in a 4% interest barring account to retire now and be able to withdraw $40,000 each year for 47years until you're 80. I'm thinking though you may need more than 40,000 though. Good luck!
2. The stock market averages 12% per year if you look at long term averages and ignore what's going on right now. Bond markets are much more stable and average about 8%, so if you need a reliable income, I would use an 8% return. Then the question becomes, how much money do you have to have, in order to earn enough to live on by investing in relatively safe bonds at an average of 8% return: If you had 500,000 (a half million). You'd get $40,000 per year income from it. If you had a million, you'd get $80,000 per year from it. If you had 1.5 million, you'd get $120,000 per year from it. So it all depends how much money per year it would take for you to live off of. Remember that if you have no job, you have to pay for your own health insurance, and your rates are only going to go up as you get older. So $80,000 per year might not go nearly as far as it would seem.
3. You need enough money that it will "spin off" in interest each year enough to meet your annual income. The safest way to calculate this is based on an average annual return of only 5%, long term (since you don't want to risk losing your funds along the way, you'd have to stick with low-return instruments like T-Bills & Bonds), so if you wanted an income of say $60,000 a year, you would need to have saved (60,000/5) x 100, or $1.2M
4. If 1 million pays 5% in interest that would be $50,000. I want to tell you if you put 1 million in a good mutual fund today, you would be down 20%. I wouldnt count on retiring anytime soon or in the distance future. I would work far as long as you can, say you saved for a long time and had invested $1,000,000.00 in the stock market, you would be down 20% in one month...How would that make you feel....I can tell you "SICK"