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Chapter 10. Everything You Need to Know ... > The Road to Retirement - Pg. 98

Everything You Need to Know About Investing Your 401(k) Money · What age do I want to retire? · How much money will I need to cover all my estimated expenses in retirement? Yup. It's that simple to establish a goal. 98 When John Dough developed his retirement plan, he had to select an investment return. Do you recall what investment return he used to calculate his required saving rate? If you said an 8 percent rate of return, pat yourself on the back--you're a good reader. After completing his worksheets, John determined that he needed to save 12 percent of his pay every year between now and retire- ment, and he needed an 8 percent average rate of return on his 401(k) investments. Our Advice Stop! We interrupt this book to bring you an important announcement. If you have not yet established your retirement goal, we suggest you do so now, before going any further in this chapter. Go back and skim Chapter 4 and then complete the worksheets in Appendix A using the John Dough example in Chapter 5. We call this 8 percent your target rate of return . Now all John has to do is look at his 401(k) invest-