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Subject:  Re: Asset Allocation Date:  4/6/2006  6:53 PM
Author:  ziggy29 Number:  50948 of 88033

>> Amount Needed to Retire = 25*(Necessary Retirement Income - Other Sources of Income), where

Necessary Retirment Income = annual expenses (including income taxes) plus savings for capital expenses

Other Retirement Income = non-portfolio expected income, like any defined benefit pensions, social security (subject to whatever assumptions about longevity), annuities, etc.

25 = reciprocal of 4%; if you believe that the SWR will be lower, than the multipler would be higher, but would still be the reciprocal of your expected SWR

Closer, but this still assumes that all your other sources of income keep pace with inflation. Social Security does (in theory, anyway), but most non-government pensions don't. So in that case, your personal investments have to provide an income stream that makes up for the lack of inflation protection in most private defined-benefit plans. In that case, the multiplier may need to be in the neighborhood of 28 to 30, depending on your expectations for inflation and remaining life expectancy.

Of course, that's mostly moot for Generation X and their descendants, most of whom won't have a pension.

#29 (who is actually vested for a puny pension with a previous employer, to the tune of $250 a month at age 55 or $620 a month at age 65, which will buy one gallon of gas by then)
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