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Author: TruckeeDave Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76101  
Subject: Re: In need of hand-holding Date: 7/21/2000 9:39 AM
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rfoster,

I would like to raise one point, which you may have already done but didn't say so in your post. Before you can determine if you are saving at the right rate, you first must have an idea of how much money you will need to fund your retirement. . . let's say at age 65 (40 years from now). The way I would do this is to pretend you were 65 years old today and calculate how much money you would need to fund your retirement say over the next 30 years. If you calculate that you need $1 million to fund your retirement at age 65 today, what amount would be equivilent to $1 million in terms of purchasing power 40 years from now. Basically, you need to calculate the future value of $1 million in 40 years making an assumption for inflation over that period of time. At an assumed inflation rate of 3% over the next 40 years, I calculate $1 million today is the present value of approximately $3.3 million in 40 years (someone correct me if I am wrong).

The links referenced in the previous responses to your post should help you do this.

Hope this helps.

Dave
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