Start with what amount you had for savings in your budget (Putting in savings 200.00 a month, then putting 250.00 in a ROTH IRA.  Determine how much of that amount you will set aside for retirement.  You may choose a percentage of your income you wish to pay into a retirement plan with an employer.

After you have determined an amount to put toward your retirement, choose a number of years you intend to continue to contribute before retirement and calculate how that money will grow over the years (NOTE: Money that is saved today will grow with compound interest or earnings over time.  saving $10,000 per year does not grow to $300,000 in thirty years.  At 3% interest, starting at 0.00 and adding $833.33 per month (10,000/year) grows to $486,826.16 in 30 years ($696,435.86 at 5%)).

Then determine the age at which you will retire and and then how much income your retirement will provide for you over your remaining life expectancy.  $487,000 divided by 30 years gives you $16,233 per year but remember that your nest egg can still earn interest so you could withdraw $24,800 per year and it would last you 30 years until the money ran out if you could get a 3% rate. 

If you have already been contributing, for some time, use that contribution, plus any increase in contributions you will be making to calculate your retirement plan (e.g. you can increase contributions as inflation raises your income.

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To determine how much of your savings you will set aside for retirement lets break down the information provided 1 Monthly savings 20000 2 Contributio... View the full answer