What average annual return do you need on your investments between now and retirement to reach your number?

400 words finance due in 5 hours

The average annual return you need on your investments between now and retirement to reach your numerical goal depends on several factors, such as your current age, current savings balance, desired retirement age, and the rate of inflation. To determine an exact number for the average annual return you need to achieve your goal, it is best to use a financial calculator or speak with a financial advisor.

Generally speaking, if you are currently in the prime of your working years and have not saved a significant amount towards retirement yet, then you will likely need to earn relatively high returns (7-9% annually) over the long term in order to reach your goal. This assumes that you are also making regular contributions along the way so that compounding can work its magic over time. On the other hand, if you have already saved up quite a bit for retirement and only have until closer to traditional retirement ages (65+) before needing access to those assets then lower returns may be needed (3-5% annually).

When estimating how much of an average annual return is necessary when investing for retirement goals it is important not forget about inflation since it erodes purchasing power over time and therefore affects real returns. A good benchmark for inflation is 3-4%, meaning any average annual return below this level will likely result in diminished purchasing power by the time one retires due all expenses associated with living increasing throughout their life span being discounted regularly via inflation rates.

In conclusion: while there isn’t necessarily one single answer as far as what type of average annual return one needs when investing toward their retirement goals; generally speaking most people should aim for higher returns when starting early but still take into account inflated costs relative to income levels down the line due to things like inflation when creating plans prior to retiring. Ultimately though it is always best practice consult with professional advisors or run calculations through various financial calculators before making any major decisions regarding investment strategy or goals around retirement planning specifically.