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I'm a soon to be divorced single mom, age 44, living on

Hello. I'm a soon to...
Hello. I'm a soon to be divorced single mom, age 44, living on mostly alimony for the next 3 years. Can you help me understand how much I should be saving for retirement each month? I ill have about 300k in a retirement account. How much will that end up to be in 25 years? And given that, how much should I plan to put away monthly? Thanks! (I live in Atlanta, cost of living a bit high here)
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Answered in 32 minutes by:
7/10/2017
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Finance
Satisfied Customers: 2,775
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Hello, My name is***** am a Certified Financial Planning ® Professional. I am also registered with the IRS and have obtained a valid Preparer Tax Identification Number.

The amount you may need in retirement has several factors. A general rule of thumb is to plan to replace about 70% of your current income during your retirement years.

A good first step is to think about how you want to live during your retirements years. Will your house be paid for, where will you live? Do you plan on selling your home.

Do you have a pension and will you be able to draw off of Social Security?

How much will 300K be in 25 years? The answer depends on how your funds are allocated and invested. Assuming a 7% annualized rate of return for 25 years $300,000 would grow to $1,628,229.79.

If you withdrew in retirement 7% of the principal you would receive $113,976 annually. Since the funds grew tax deferred you would owe taxes on this amount.

There are a lot of scenarios that would play out over a 25 year period of time. The S & P 500 has historically returned 8% annually, however this is not a guaranteed return and returns do fluctuate from year to year.

I recommend consider Roth IRA and/or savings the funds in a taxable savings account or brokerage account before you make new contributions into a retirement account.

The above information is generally financial planning information. You have a long time to prepare and time is on your side.

My goal is to answer your question as thoroughly as possible with the information communicated to me.

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Chad CFP ® professional

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Customer reply replied 1 year ago
ok, is there an online calculator for this that won't make me sign up for anything : ) ? The amount will be 250k if I take out 50k to put toward a home purchase, so I'd like to play with these numbers. Also, I could put more $ down and get better terms on my mortgage. Do you think this is a good way to diversify the funds as well (into a house)? I'll have a QUADRO, so will not have to pay penalty, but will have to pay tax, if I'm understanding correctly. I'll need to take some for down payment and cash reserves/emergency fund in the first couple of years.

Here is a calculator to determine "compound interest," which is also known as compound return of an initial investment over a certain amount of years at a certain rate. I used $300K, 25 years and 7% rate of return

https://www.investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator

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If you plan to live in the house for a longer period of time (10 years or more) then I would agree that taking 50K out and paying down a home loan is a good way to diversify.

Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Finance
Satisfied Customers: 2,775
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
Verified
Chad EA, CDFA®, CFP® and 87 other Finance Specialists are ready to help you
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Customer reply replied 1 year ago
thanks. im going to start another question, k?

From what you are stating you seem to be aware of the important financial factors to consider. I would add that if you have the opportunity to spread out the distributions over years, then you should do so.

Tax Rate--Single Taxpayers--2017

Taxable income: Tax: Over But not over Tax +% On amount over $ 0 $ 9,325 $ 0.00 10 $ 0 9,325 37,950 932.50 15 9,325 37,950 91,900 5,226.25 25 37,950 91,900 191,650 18,713.75 28 91,900 191,650 416,700 46,643.75 33 191,650 416,700 418,400 120,910.25 35 416,700 418,400 ....... 121,505.25 39.6 418,400

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Ok, I will close this question. Thank you very much

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