No. of Recommendations: 0
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.

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.