Quote:
Originally Posted by Mormon Red Death
most of us wont have a pension and social security will be low so How much do you think you need.
I am 31 and I figure I need about 2.1 million in the bank to live a pretty good lifestyle when I retire at 63. Assuming I live to 93 and I take 75% of the equivalent of 8,000 a month out to live on (not counting assets such as house or cars etc..)
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Mormon Red Death, it seems like you are assuming that the portion that you don't take out (every month) isn't growing at some rate in terms of your calculations:
2,100,000/(360) = $5,833 or 73% of 8000 dollars.
A simple way to think about it is if you when you retire you buy a 30 year annuity worth 2.1 million dollars. Suppose, the annuity pays 5% annually (but monthly payments). Then your monthly income from the annuity is, $11,273 per month. Of course, that is in nominal dollars and not real. Let's suppose you can get an annuity that pays a constant 2% annually in real dollars (kind of like an i-bond). Then the monthly income in real terms (relative to price levels the day you retire) is $7,762. Thus, 2.1 million should give you significantly more per month than 75% of $8,000.