How much money do you need to save to retire by age 40?

The more you save, the sooner you will be able to retire. But how much money do you need to accumulate before you can retire? Lauren Lyons Cole, a Business Insider reporter, breaks it down in the graph below.

To retire at 40, first calculate your annual spending and divide it by 4%. (0.04). This is the amount you must save before retiring.

You can leave employment as soon as you know what your aim is. To make this work, you must first invest your savings. You can only live for 25 years on these savings. Thus, if you retired at 40, you’d have to return to work at 65. Yet there is a method to make it even longer.

If you continue to invest and achieve an annual return of 5%, you will have enough money to live on for the rest of your life.

Courtesy: Business Insider

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