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Author: Dylander One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: On the Brink of Retirement Date: 5/26/1999 1:47 PM
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I did a little math concerning retirement financing and came up with a rather interesting observation. It is interesting in that I didn't see it earlier, and that it is applicable no matter how much you have to retire on. There appears to be a magic number to determine if you have saved enough to retire on, and/or how aggressively do you have to invest what you currently have. You need to know the following:

1) What percentage of what you have are you going to withdraw per year.
2) What is the rate of inflation per year.

Now we all know that #2 is pretty hard to calculate, but on a year by year basis you can make a pretty good guess. If you add #1 and #2, then that is the rate of return you must achieve with your investing to 'break even'. Of course, this doesn't take into consideration the fact that some people would like to 'spend down' some of the principle, but what it will give you is a ball park value to determine if you have saved (or are saving) enough for retirement, or are you spending your retirement funds too quickly. Hope this helps.

Dylander
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