Question

You are trying to decide if you have enough money to retire. You are expecting $2,500 a month from Social Security. You have $1.2 million in your retirement savings, and you only want to use the earnings to live on, which is at 3.5% annual rate. You are currently making $64,000 a year and plan to live on 80% of that amount. Do you have enough to retire based on these numbers?

Answer 1

64,000 * 0.8 = $51,200
1,200,000 * 0.035 = $42,000
2,500 * 12 = $30,000
42,000 + 30,000 = $30,042 yearly to live on, thus stopping short of your goal of $51,200.

Answer 2

Neil, when I went to school, 42,000 + 30,000 used to come out as 72,000
So yes, he can live comfortably without even touching his 1.2 million retirement fund.

Answer 3

My mistake. I didn't have access to a computer at the time, was doing all this from my phone.