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Old 05-22-2013, 04:29 PM   #11 (permalink)
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10 mil I'd be good to go.
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Old 05-22-2013, 04:34 PM   #12 (permalink)
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If I wanted to "retire" five years down the road I'd need about $7.25 million total to cover the following 65 years.
  • It's about $40,000 for cost of living in the Cumberland County area of Maine for a two person household currently
  • Average inflation rate from 2000 to 2012 was 2.5%

So I figured that in five years it'll cost about $45,000 for cost of living. Using that as a base and 2.5% inflation I get an equation of f(x)=45000*1.025^x

Now I know that's probably pretty horribly simplified, but it's close enough for me right now. Anyways, finding the area under the graph for that equation from the initial year to year 65 gives me $7,249,460.60.

So, I'd need about $7.25 million dollars to cover me and another person from when I'm 24 until I'm 89.
But isn't it lower than that? Your not, from what I can see, considering return on investment. The money you are not using to live on should continue to make you some return.
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Old 05-22-2013, 04:56 PM   #13 (permalink)
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Yeah, I did it as if I got said money and just put it in a safe or something.

Heck, if I put it in a money market savings account at my local credit union at 0.3% I'd drop down to $6,440,217.10
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Old 05-23-2013, 11:49 AM   #14 (permalink)
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Yeah, I did it as if I got said money and just put it in a safe or something.

Heck, if I put it in a money market savings account at my local credit union at 0.3% I'd drop down to $6,440,217.10
Don't. Do. That.

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Originally Posted by CJOttawa View Post
Think about this:

Let's say you work at a company for 25 years that offers a defined benefits (DB) pension. They offer "2% per year" of your best year of service so that 25 years nets you "50% of your best year."

Let's say you make $60,000/year. 50% of that is $30,000 per year paid out in your retirement, for life. Some plans are even inflation adjusted.

If you needed $40,000/year to live on, that pension would mean you only need to generate another $10,000 per year to make up the difference.

4% safe withdrawal rate (SWR) would mean you'd need $250,000 of your own savings to generate that $10,000.

Clearly, if you have the option of a DB pension, they often make a lot of sense, assuming they're secure.
Do any large firms still offer DB Pension plans? I know the bank I work at pension plan got phased out during the last merger. I think Pension plans, at least in the Southern parts of the US have gone the way of the dinosaur.

Last edited by docholiday; 05-23-2013 at 12:11 PM.
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