How to Invest for $50,000 Every Year in Retirement

The amount of income you’ll need in retirement depends on your lifestyle and your plans. It’s helpful to estimate how much you’ll need so you can ensure your savings will provide it.

For many people, $50,000 in annual income from savings is a good number. The Bureau of Labor Statistics estimate of median weekly earnings in the first quarter of 2021 roughly equaled that on an annual basis.

If you’re hoping for your investments to produce $50,000 in annual income, just how much would you need to save?

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What you need to save

The exact amount you’ll need invested in order for your savings to produce $50,000 is going to be determined based on your withdrawal strategy. You need to decide how much you can take out of your retirement accounts without risking running them dry.

One common rule of thumb is called the 4% rule. It allows you to withdraw 4% of your account balance in the first year of retirement. Each year thereafter, you’ll adjust your withdrawals upward based on inflation. Historically, that’s always allowed a retirement nest egg to last at least 30 years, and usually far longer.

If you plan to follow the 4% rule and you want $50,000 in retirement income from your investments, you will need to have $1.25 million saved by the time you leave the workforce.

How you can get it

If your goal is to have $1.25 million, it’s important to figure out what you need to invest over your career to get it. And that depends on how old you are when you start saving and how many years you have until retirement.

The table below shows the monthly investment needed to end up with a nest egg that will produce $50,000 in retirement income based on how many years you have to save. It assumes you are starting from $0 and that you earn an average 8% annual return, which is reasonable with an appropriate mix of investments.

Years to Retirement
Monthly Amount to Invest

10
$7,190.56

15
$3,836.40

20
$2,276.26

25
$1,424.87

30
$919.52

Source: Investor.gov

If you’re starting with some money saved already, the monthly contributions you’ll need will be lower. You can use the Savings Goal calculator at Investor.gov to determine the specific amount to invest based on your years until retirement and the current balance of your nest egg.

While it might seem daunting to save so much, remember that the earlier you start, the easier it is to hit your target. If you can’t invest the necessary amount now, put away as much as you can for your future. Then, increase the amount as your income grows or you make cuts to your budget.

If you’re able to amass $1.25 million, you’ll be able to enjoy $50,000 in income every year from your investments and should have plenty of money to do the things you’ve dreamed of in your later years.

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