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I earn about $20,000 a year and have about $50,000 in savings, stock, etc. What do I have to do to be able to retire in 12 years?


It depends on your age. If you're 53, then you'll be 65 in 12 years and eligible to collect full Social Security benefits. With the comparatively small amount of savings that you can devote to retirement, that Social Security income will be critical. It will also be important to increase your nest egg, and there are steps that you can take right away to do that.

If your savings are not already in a tax-advantaged vehicle like a 401(k) or individual retirement account, you should open an IRA now at a discount brokerage or fund management firm and contribute the annual maximum - $6,000 if you are over 50, $5,000 if you are not - until most of your savings are in the IRA. That will give you an immediate tax break and allow the returns on your investments to accrue tax free also. The money will be taxable when you withdraw it, but you are likely to be in a lower tax bracket then.

If you don't have a balanced investment portfolio, you should create one now. With 12 years to go and $50,000 to invest, financial planners would probably recommend 70 percent or so in stock funds, including some exposure to foreign markets, and the rest in bond funds. The website can suggest some good names. (You may need to own the same funds in your IRA account and with your non-IRA savings until you have migrated whatever portion of your savings into the IRA that you are planning to.)

Your income is modest, but you would help your cause if you could set aside an additional $100 a month. If you do that and if your investments grow by 8 percent a year, your $50,000 will turn into just under $160,000 in 12 years, according to the calculator on the website. If you figure on your nest egg returning 6 percent a year on safe investments after you retire, then you can take out 6 percent for living expenses without appreciably drawing down the balance. That works out to nearly $800 a month plus whatever you can count on from Social Security. The two together should get you close to the income you're earning now. Good luck.

-Conrad de Aenlle