Hi ,
I am 30 , haven’t invested ever yet . My question is , how much money do I need to put into index funds to be able to retire at 50? Currently making 100,000 per year , increasing to 150,000 hopefully by end 2020 .
Thanks!
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Hello and welcome. The answer to your question depends on how much you will need to retire. If you need 10 Million dollars, you will need to invest a lot more than if you need only 1 million. To figure out your number, multiple your annual spending by 25. This will give your your FIre number. For example, if you need $100,000 for your living expenses, then you need 2.5 million to retire.
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To add to what Larry said, I’d recommend putting your numbers into a retirement calculator. The more you make, and the less you spend, the faster you can retire!
Projecting a 7% rate of return, investing $2,000/month would get you to about $1M by the age of 50. That would provide about $40,000/year of income indefinitely. That would likely be a step down in cost of living, so you probably want to shoot for more than $2K/month if you’re planning to retire at 50! 
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Right now we’re spending around 75,000 annually. We have two kids & rent . By the time we reach 50 we might have a mortgage & maybe 9 kids (who knows ?) so how can I figure that out ?
I forgot to add , I have 250,000 in savings - want to have 50,000 at a side for a rainy day - 100,000 if we need to buy a home in the next few years - the rest I thought of splitting up between index funds & investment real estate? Or perhaps everything in index funds to get there faster ?
Great job on the savings! A thought to get a handle on your cost of living when you want to retire is figure out how many kids would still be dependent on you at 50. Then, estimating how much per year that will cost. Take this number and add it to your expenses for you and your spouse (insurance, food, gas, car payments, discretionary spending etc.), and that will roughly be your cost of living at that age. If you anticipate still having a mortgage at 50, then add that to your cost of living as well. Let’s say you calculate living on $75k per year salary in retirement. People usually shoot to extract 4% of their investments per year, (This is essentially what Larry essentially said above) which means at $75k salary in retirement you want a nest egg of around $1.875 mil ($75k x 25). To save that much in 20 years, it would take around $50k per year in investing.
Another thing to look at is how much money you would be able to save over the course of the next 20 years. If you have more children, you can take your current cost of living and add your calculated cost per child. Lets say its $10k per year per child. If you have 3 kids in 3 years, your cost of living then would be $75k+$30k= $105k. Now, you need to subtract that from your post-tax income and that is how much you can expect to save per year. In this hypothetical scenario if you wanted to hit that goal with 9 kids, you would need to be making $195k per year post tax if all of your kids are dependent on you at once ($75k + $10k x 7 more kids + $50k investing = $195k).
I hope this helped, and please calculate these numbers yourself! But, as you can see, your family goals and retirement goals tie into one another.
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