What does it take to retire?
Your calculation will go like this (we've factored in a Consumer Price Index inflation rate of 2.22% per year, which has been the average rate of inflation in the 10 years from 2005 to 2015): Your estimated annual income at the time you retire - $(your estimated annual income at the time you retire) x 1.022 (inflation factor) = what you'll need to maintain your current lifestyle.
This shows how much you'll need as you enter your first year of retirement. Multiply that result by the same formula to see how much you'll need in your second year. Repeat this 15 or 20 times to see what inflation will do to your dollars over the years. The total of all those calculations - year one + year two + year three, and so on - is how much money you'll need for retirement.
For example, if your income at retirement is $50,000 per year, you'll need $51,100 to produce the same buying power in your first year of retirement. In year five, you'll need $55,747; in year 10, you'll need $62,155; in year 15, you'll need $69,300; and in year 20 you'll need $77,265. Over a 15-year retirement, you'll need $896,569 in income. Over a 20-year retirement, you'll need $1.27 million. That's a lot of money, but we can help you get there with an Individual Retirement Account.
Learn more about what we offer! Individual Retirement Accounts (IRAs) | IAA Credit Union (iaacu.org)