How to calculate funds needed for retirement?

Discussion in 'Financial Independence, Retire Early (FIRE)' started by VictorAus, 29th Jul, 2021.

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  1. VictorAus

    VictorAus Member

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    Recently I turned 40 and started thinking about retirement planning. The main thing I needed to know was to determine how much would I need to retire. After scouring through the web and looking at various calculators, it turns out the logic to calculate this amount is not that complicated.

    Step 1: Work out how much funds you would need to live comfortably?
    In my case, I am going with $200K per year and assuming I'll live another 60 years ( I know, wishful thinking...lol).

    Step 2: Determine what your investment would return on average?
    Say ETFs or Properties returning 4% per annum.

    Step 3: Calculate Present Value to see how much funds you will need to retire.
    = pv(rate, number of periods, payment amount)

    Step 4: Calculate Future Value to determine how long will take to save that amount?
    = fv(rate, number of periods, payment amount)

    See screenshot.

    Hope it helps.
     

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    VictorAus, 29th Jul, 2021
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  2. Skyegirl

    Skyegirl Well-Known Member

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    A rule of thumb is when passive income is twice what one needs a year.
     
    Skyegirl, 30th Jul, 2021
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  3. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Colin Rice, 30th Jul, 2021
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  4. VictorAus

    VictorAus Member

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    VictorAus, 30th Jul, 2021
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  5. Heinz57

    Heinz57 Well-Known Member

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    Heinz57, 30th Jul, 2021
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  6. datto

    datto Well-Known Member

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    $100K per annum for a couple who own their own home should make a very comfortable living me thinks.
     
    datto, 30th Jul, 2021
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  7. Baker

    Baker Well-Known Member

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    I figure (if) when I get to retirement age I'll see how much money I have and then work out how long I'll live for. Far simpler calculation when one of the variables is fixed.
     
    Baker, 31st Jul, 2021
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  8. Anne12

    Anne12 Active Member

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    Anne12, 1st Mar, 2024
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