For many investors, Apple stock is the definition of a “getaway stock.” Some of the people who realized the potential early on in the company may have made millions of dollars in profits. Even in the past decade, Apple investors could have made a lot of money, as the stock price has increased tenfold.
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So how much Apple stock would you need to have bought 10 years ago to retire today?
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How much retirement money is enough?
The first step to figuring out how much money you'll need to retire is figuring out how much you'll have to spend each year after you stop working. This is important because this amount determines how much you will need to withdraw from your savings each year in retirement.
AARP recommends that retirees should expect to need about 80% of their current income each year. This is because many of the costs associated with the job, such as payroll taxes and his 401(k) contributions, will no longer be necessary.
Learn more: $2 million in retirement savings: How much can you withdraw in a year?
4% rule
Once you know how much money you need to withdraw from your retirement account, you can use a rule known as the 4% rule. According to this strategy, retirees who invest in a portfolio consisting of 50% bonds and 50% stocks can withdraw 4% of their retirement savings each year and are unlikely to run out of funds during their lifetime. That's what it means.
While this rule is good for getting a rough estimate, you should always consult a financial advisor before making such major financial decisions. How much you need to save depends on your specific expenses and assets. A financial advisor can help you calculate your retirement savings goals based on your specific situation and risk tolerance.
Calculate your retirement needs
So how much does the average American need to retire? According to the 2022 Census, the median annual income in the United States was $75,149. Adjusted for inflation, that would be $82,948 in 2024. Following the 80% recommendation, the average American should aim to withdraw $66,358 annually in retirement. Divide this number by 4% to get an estimate of how much you should save for retirement.
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$66,358 / 0.04 = $1,658,950
This means the average American should be able to maintain a good quality of life in retirement with about $1.7 million in savings.
How much has Apple grown in the past 10 years?
As of market close on March 28, 2024, the current price of Apple stock was $173.31. The stock has repeatedly climbed above $190 over the past year, but never once broke through the $200 resistance.
Ten years ago, at market close on March 28, 2014, Apple's stock was trading at $16.85 per share. This means that his $100,000 invested in Apple in March 2014 is now worth more than $1 million.
How much would you need to have invested in Apple 10 years ago to retire today? Take a previous estimate of how much retirement savings you'll need based on the U.S. median income and put it into 10 years ago in Apple stock. Compare it to your annual return.
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$16.85 / $173.31 * $1,658,950 = $161,290.79
This means that investing $161,291 in Apple stock in 2014 would provide enough money to support the average American's retirement lifestyle.
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This article originally appeared on GOBankingRates.com: If you invested $161,000 in Apple 10 years ago, you could retire today.
