Project your Social Security benefits at the organization’s website. Many retirement plans suggest that you should create a lump sum of cash to generate enough interest income equal to about 80% of your current income. Calculate how much money you would have to save each month from now until retirement in order to achieve a lump sum large enough to yield interest income equal to 80% of your current income. How much would you need to save each month?

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In order to achieve a lump sum large enough to yield interest income equal to 80% of your current income, you will need to save the equivalent of 12.5% of your current salary each month from now until retirement. This calculation is based on the amount needed at retirement being 25 times your annual salary and assuming an average rate of return of 5%. To illustrate this, if you are currently earning $50,000 annually then you would need $1,250 per month saved in order to have a lump sum at retirement that can generate interest income equal to 80% of your current salary.

It is important to note however that this figure assumes a fixed rate return over many years and thus may be conservative depending on market conditions. Additionally , inflationary pressures over time should also be taken into consideration since cost living expenses often increase faster than wages . Therefore , individuals looking secure their financial future during their working life should strive put away as much possible earlier stage so they build up sizeable nest egg by time retire which can cover any eventualities come along way.