The biggest problem I had with the book Smart Couples Finish Rich was that it mentions the figure of "a million dollars" throughout the book. In almost any discussion of how much an amount could grow to, the example of how long it would take to reach a million dollars was invariably the calculation that was shown.
This fixation on being a "millionaire" has two problems, in my mind; on the one hand, you might not need a million dollars, and on the other hand, you might need a whole heck of a lot more.
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On the other hand, saving and investing a couple of million dollars makes a lot of money for banks and investment brokers. My husband and I are closely tracking and actively reducing our household expenses, and hoping to need only about 35% of our income post-retirement. The total figure to save for that, according to Excel? $664,622.80 - only two-thirds of a million.
So, don't be misled by the idea of being a "millionaire". If you're living the American dream, a million in the bank isn't necessarily going to buy you a retirement with a cottage, golfing every day, and twice-yearly cruises. But by the same token, if your hopes are more modest, you need never be a millionaire to be happy.
September 22nd, 2008 at 11:21 pm 1222122075
September 22nd, 2008 at 11:34 pm 1222122846
Personally, I would start with your current salary and multiply by 25. This should give you a good rough of the envelope number.
September 23rd, 2008 at 12:27 am 1222126043
September 23rd, 2008 at 02:46 am 1222134415
merch is correct. Take the income you anticipate needing in retirement and multiply by 25. That's how much you need to retire. That allows for a 4% annual withdrawal, adjusted annually for inflation, and minimizes the chances of outliving your money.
September 23rd, 2008 at 03:17 am 1222136270