Net worth: $700,000, with $600,000 invested Emergency fund: $50,000 Salary: $130,000 Can I afford to retire in NYC before age 60?
I’m 33, have no debt and a net worth of $700,000, with $600,000 of that invested , $50,000 in an emergency fund and $50,000 sitting in a bank account so I can invest it later this year if we get a selloff. My fiancée is 30, also has no debt and has a family trust worth $100,000 that’s also invested.
Add to that your hope of saving 20% a year of both your and your fiancée’s salaries, as well as half the bonus, and you’re likely to be far ahead of your contemporaries in terms of retirement savings — assuming, among many other things, that you invest the money well. Here’s how the math might work out for you to retire by 60, explains certified financial planner John Carbonara of NXT Phase Financial Services in Jericho, N.Y. Assuming you and your fiancée have a total of $750,000 invested and get a roughly 6% return on that over the next 27 years , you’d have more than $3.6 million invested the bank. Now if you add in annual savings — let’s assume you two save $65,000 a year for 27 years and earn 6% — that could add up to more than $4.1 million.
Indeed, you have to factor real life into the equation — including taxes, such as the income tax you might pay withdrawing from your retirement fund and the tax penalties if you need to withdraw pretax retirement funds before the age of 59½, Carbonara says. Nolte notes that you should think about whether you will have kids and factor that in, as well as how much you will really need to live on in your New York retirement.
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