Rate of Return

How important is the Rate of Return to your overall Investment Plan? 

What if the Rate of Return you need seems unrealistic? 

What is a realistic Rate of Return that you should expect? 

If you are 5-10 years from retirement, you have built a plan, and you know what you will be saving, you can calculate what your rate of return needs to be. 

What if that number is 15%? Is that realistic? 

15% may seem realistic if you just look at the last few years, but to get an accurate view, look back 10, 20, or even 40 years. 

We want to create a plan that will work at 5%. It is realistic, and your Investment Plan will be in great shape. 

The Difference Just 1% Makes 

Take a look at 3 scenarios for saving $10,000 per year over the next 30 years: 

· At a 3% rate of return, you will end up with a nest egg of $475,000. 

· At 4%, you will reach $560,000. 

· At 5%, you will reach $665,000. 

1 % has a major impact which emphasizes the importance of not playing it too safe, especially in the early years. 

The Tipping Point 

Now look at another scenario after retirement with a $500,000 nest egg, withdrawing $25,000 per year for 30 years as part of your Income Plan. 

· At 3%, you would be left with $24,000, essentially running out of money. 

· At 4%, you would have $219,000 of your original $500,000. 

· At 5%, you would still have your nest egg of $500,000. 

If you find you only need 4%, congratulations! You are in good shape. You do not need all your money in the market, but you will not want to take it all out either. 

We strive to find that ideal tipping point of risk for your optimal retirement plan, no more, no less, so you will have a nest egg that stays steady and lasts a lifetime.

If you have any questions, please don’t hesitate to call us at 844-CARLSON.

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