Is One Million Dollar Enough?
Depends on what you are asking, right? Want to fund your next dream vacation? Absolutely. What about Jennifer Aniston’s house? A million can get you started. If you want to rely on it to retire? Hell No!
Our retirement system got really f#$%ed up lately. Our parents are probably the last lucky generation to get both social security and company pension. As the traditional pension keeps vanishing and social security running dry in thirty some years, we are on our own, my friends.
So, let’s see how much you need to “live happily ever after”.
A few assumptions first:
- If you make $50,000 a year and still want to keep the same income when you retire
- Annual withdraw rate can’t exceed 5% so you don’t run out of your principle
- Inflation rate is 3% per year
- You retire in 30 years
You need $121,000 yearly income in 30 years to have the same buying power, which means, you need to have a nest egg of 2.4 million dollars when you retire. For those hot shot young consultants out there, 4 or 5 million may not be an exaggerated figure.
It’s better to save now than feeling sorry when you get older. cnn.money.com has pretty cool calculators to figure out exactly how much you need to save/invest every month. Check out the million dollar calculator and the saving calculator.
I think the “pay yourself first” concept is a really effective way to force yourself into the saving/investing habit. Setup auto withdraws, then feel free to spend the rest. Again, living under your means is always the pre-req, right?
Hope everybody can retire early and comfy, if not rich.
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POSTED IN: Fabulous Work Life Balance
7 opinions for Is One Million Dollar Enough?
Jeremy Wright
Nov 24, 2005 at 1:21 pm
There are GIC-based investment funds here that will give you 500$/month for 20 years in income for 50,000$.
So, for my standard of life I’d need to deposit about 500,000$ (including inflation and such) to be able to “retire” at 50, and probably another 500K tucked away in a high growth, no-withdrawal fund to fund the 20 years after that.
+ pension, I’d be set.
So, yeah, barebones “keep yourself alive”, 1M$ would be enough for me to live on for 40 years :)
Christine(Yuna)
Nov 24, 2005 at 2:40 pm
Yep.. if you don’t care about the principle, 1 million may not be bad… but it’s nice to keep the principle there and keep rolling that earnings…:-)
Jeremy Wright
Nov 24, 2005 at 2:44 pm
If I had the million, the half million would grow to over a million over the first 20 years (more than keeping pace with inflation).
It’s one of those “when is half a million really a million” questions.
Jeremy Wright
Nov 24, 2005 at 2:45 pm
Also note that my annual income that we live on right now is closer to 25K. Cost of living here being next to nothing, that’s more than enough.
So, if you need 2.4 to live on your salary, I really only need 1.2 ;-)
Christine(Yuna)
Nov 24, 2005 at 4:42 pm
The hardest part is to make the first million. With a million, gee.. there are a million possibilities as how to grow that million dollar tree… Now, I just need to blog my brains out, setup another 50 sites and make that first million.. hehehe…:)
Jeremy Wright
Nov 24, 2005 at 5:20 pm
No, no that’s MY plan!!! :D
Michael(B)
Jan 24, 2006 at 8:08 am
Maybe we should band together and try to make a million this year!
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