Part 3/8:
The Power of Compound Interest
One factor to consider is the potential growth of investments over time. If Thomas’s assets are invested wisely and a return rate of 10% is achievable, his $1.4 million could double in approximately seven years. This projection is grounded in historical market performance, where investments in good growth stock mutual funds have previously yielded around an 11% average return.
According to these projections, Thomas could expect to see his retirement fund potentially grow to $2.8 million by age 61 and $5.5 million by age 68 if no withdrawals are made. This upward trajectory allows retirees to maintain their lifestyle by drawing income from the investment earnings rather than the principal.