Tesla stock has had a rough few months, but the electric car maker is still worth 10 times what it was a decade ago. As one of the top stocks in the S&P 500, Tesla has driven a significant portion of the market's growth in recent years.
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So, if you had invested in Tesla stock in 2014, how much would you have earned today? How much do you need to invest to retire comfortably?
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How much retirement money is enough?
When deciding how much money to set aside for retirement, it may be best to consult a financial advisor. Everyone's financial situation is different due to different sources of income and expenses, and there is no one-size-fits-all solution. Retirees who don't properly account for all their expenses run the risk of outliving their savings and running out of money.
However, there are some guidelines you can use to know how much you should aim to save. One of them is the 25x rule. To find out how much money you'll need for retirement, multiply the amount he's likely to spend in his first year of retirement by 25.
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How much money does the average American need until retirement?
You can use the 25x rule to find out how much the average American needs to save for retirement. The median income in the United States in 2022 was $75,149, according to the latest data from the U.S. Census Bureau. Adjusting this number for inflation yields a median value of $82,948 in 2024.
As of January 2024, the average Social Security benefit is $1,907 per month. This means that Americans' median desired annual retirement withdrawal amount is:
$82,948-($1,907×12) = $60,064
Multiplying this number by 25 gives the average American retirement savings of $1.5 million.
How much has Tesla grown in the past 10 years?
As of March 28, 2024, the price of Tesla stock was $175.79. Ten years ago, at market close on March 28, 2014, Tesla stock was trading at $14.16 per share. This means that his $10,000 invested in Tesla in March 2014 is now worth about $124,145.
So how much would you need to invest in Tesla 10 years ago to retire? Take a previous estimate of how much you would need to save for retirement if you earned the average U.S. income, and then Compare that to Tesla stock's 10-year return.
$14.16 / $175.79 * $1,501,600 = $120,954.87
This means that if you had invested $120,954.87 in Tesla stock in 2014, you could have sold and retired today. Of course, it was very risky to invest all your money in his one stock. If Tesla were to go bankrupt under unforeseen circumstances, you would lose all your money instead.
How much savings does the average American have?
Americans may have much less than optimal amounts in their savings accounts. The median American age 65 to 69 had just $50,650 in savings in 2022, according to the Federal Reserve's latest Consumer Finance Survey.
The top 1% of Americans ages 65 to 69 have at least $10.4 million in savings, which may explain why the average of $785,099 is much higher than the median.
How many people have $1 million in retirement savings?
From 2022 to 2023, 15% of Americans had at least $1 million in retirement savings.
In the United States, the gap in retirement savings between low-income and high-income earners is widening. In 2007, one in five low-income households had money in a retirement account, but by 2019 that number had fallen to one in 10. Incomes of high earners nearly doubled over the same period. When trying to save money for retirement, it's important to avoid taking unnecessary risks. The idea of finding the next Tesla or Bitcoin may be appealing, but it can also be extremely dangerous. Historically, about 40% of the companies in the Russell 3000, an index of the top 3,000 U.S. companies, have experienced declines of more than 70% from their peak and have not recovered. Always consult a financial advisor before making any major financial decisions.
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This article originally appeared on GOBankingRates.com: How much would you have had to invest in Tesla 10 years ago to retire today?
