When it comes to retirement planning, the golden rule is to plan as early as possible. Waiting till your 40s or 50s to think about retiring at age 60 is one big financial mistake that many do. The earlier you start, the earlier you can retire, and the lesser the money required to achieve your retirement goal. What if you had $5,000 a month when you retire?!

What is your retirement income?

Before we get into how much money you should invest to retire at a specific age, we should determine how much income do you require to retire at a certain point. Since individual circumstances vary vastly, we can only help you determine your number. We cannot actually tell you your number.

To begin it all, you need to know your average expenses right now. If you haven’t already, we suggest you start keeping track of your monthly expenses. This will give you a good indication of how much you will need on average to maintain your current standard of living when you retire.

Among many factors that go into that magical retirement income amount, one major factor is what do you plan to do after you retire?! Your monthly expenses can significantly increase or decrease based on this goal. For example, if you plan to travel the world after you retire, your expenses will greatly increase. However, if you plan to paint and do gardening, your expenses will be much lesser.

Another major factor to take into consideration is your responsibilities. If you are fortunate enough to retire at the age of 40, you might still have a major chunk of expenses towards your children ahead of you. Childcare expenses, medical bills, college, tuition, boarding, or wedding expenses can be a big burden, and could severely hinder your retirement plans. On the flip side, do you have to take care of your parents?

Are you a relatively healthy person or are you prone to sicknesses easily? Aging isn’t kind to our fragile bodies. Although we cannot predict any major medical issues in our future, at least plan to cover some general illnesses that come with age.

Do you have other income sources by the time you retire? If you were able to develop some sort of side hustle through the years, it can help massively when you retire. Even a side hustle that earns $500 a month can take years off from your retirement income goal.

Take a pencil and a piece of paper, and write everything down that comes to your mind when you think of your retirement. Brainstorm for a week and keep updating this paper with what you think of. Then start assigning dollar values to each. Hopefully, at the end of the week, you will have a comprehensive retirement income plan.

If you don’t want to do all of this, the rule of thumb is that you will need 80% of your pre-retirement income when you retire. For example, if you made $100,000 per annum just before you retire, you will need at least $80,000 per annum to maintain the same lifestyle after you retire.

How much to invest at what age to retire with $5,000 a month in retirement income?

For this article, we have considered a retirement income of $5,000 a month (or $60,000 per annum). This is a very reasonable amount to retire on. On average, we might never use $5,000/month every month, so hopefully, this income will build up some savings for an expensive treat once in a while.

Also, for this example, we have considered an annual return/yield of 6%, which is very decent, too. 6% can be considered not overly risky and not overly conservative either.

Also, for this example, we consider that you re-invest the returns every year. This is the fastest possible way to grow your investment without having to invest extra money or undertake risky investment sources.

Lastly, we considered that you are going to retire by the age of 50. Your goal might be different. But it doesn’t really affect the math shown below. How many years you want to retire earlier or later than age 50, shall equally apply for the age you start your investment.

Let’s get to the numbers now.

Age to begin investing	Initial investment	Total return for the period	Investment value at retirement age	Monthly income at retirement age
Age 20	$175,000	$890,418	$1,065,418	$5,026
Age 25	$235,000	$834,105	$1,069,105	$5,043
Age 30	$315,000	$755,863	$1,070,863	$5,051
Age 35	$420,000	$646,948	$1,066,948	$5,033
Age 40	$560,000	$503,047	$1,063,047	$5,014
Age 45	$750,000	$313,889	$1,063,889	$5,018
Age 50	$1,000,000	$0	$1,000,000	$5,000

Yes, these are some big numbers. But, you will be happy to know that you are sitting on a million dollars for any major financial crisis.

Like we suggested before, if you do have a side hustle that makes just $500 per month, these numbers will reduce vastly.

For example, you can shave off $15,000 from your investment at the age of 20, $30,000 at the age of 30, and $60,000 less investment at the age of 40. This represents an 8.5%, 9.5%, and 10.7% reduction in investment at specific ages.

Let us know what are your retirement income goals and at what age you started investing towards your goal in the comments below.