You’re planning to retire in 16 years at the age of 66. You’ve determined that the best Vanguard funds to buy for target date 2030 will need to be a little more aggressive because your annual salary of, say, $55,000 has allowed you to save just $200,000 toward your retirement.
If you put aside 10% of your income each year, you’ll likely hit 66 with approximately $689,000 to live on (according to this methodology). That doesn’t sound bad, but it’s well short of CNN Money’s recommended amount of $898,000.
Something’s got to give.
Either you will have to save more — for example, putting aside 15% of your income will get you to $780,000 based on a 6% return on your investments — or your investments will have to grow in excess of 6% per year. Given the bull run we’ve been on the past five years, this isn’t going to be easy. However, a combination of the two — 15% saved and an 8% annual return — should help get you most of the way to your target.
With this in mind, here are the best Vanguard funds for target date 2030: