How to Retire with $2,000 Salary

There’s many scenerios when we talk about retirement planning. Different people have different desires. Different desired retirement age, lifestyles, goals, etc.

I will be using the following assumptions for my example.

  • Annual inflation rate: 2.65%
  • Annual salary increment: 4%
  • Current age: 31
  • Retirement age: 70
  • Monthly salary: $2,000 (today’s dollar)
  • Desired retirement monthly amount: $1,200 (today’s dollar)
  • Annual bonus: 2 months
  • Annual investment growth: 3.5%
  • Portion of annual income allocated for retirement planning: 15%

My assumptions above are based on a modest salary of $2,000 and a desired monthly retirement fund of $1,200. This is quite a basic amount and feel free to adjust to, based on your personal preference.

Why $1,200? Enough? Let us see:

  • Food: $450
  • Transport: $50
  • Phone and broadband bills: $100
  • Insurance and medical: $300
  • Entertainment and miscellaneous: $300

By then, we should not need to worry about our house payment or car loans.

My example will also assume that you are able to at least achieve a constant growth on your salary until you are age 69.

If you are to put aside 15% of your income annually for retirement, and use it to earn a conservative interest of 3.5% every year, you will earn a total of $687,690 from age 31 to 69.

Based on life expectancy for men of 83 years old, 14 years of retirement will require an amount of $666,399.

This shows that if you are willing to delay your retirement age, start to save and invest now, retirement is still a possibility. This also shows that if you are able to start earlier, you will have more time and resources to achieve your desired retirement goals.

If you have a higher risk appetite, you may even diversify your investments to achieve a higher return.

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Author: Zheng Fan Minimalist

I don't want to be different. I want to be me.

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