inflation

[claire]

The other day i had a shock because i realised that my ER plans/calculations had not allowed for inflation

silly as it sounds but i hadnt really thought about it or appreciated the implication of inflation on lump sum savings, we dont have any pensions or index linked investments

I suppose this means that we have to save even more which would take longer which would extend working life

sometimes there seems to be no end to this .....

 

[Rich_by_the_Bay]

Have you used Firecalc? It handles that for you. And don't forget taxes .

 

[claire]

thanks Rich, i will give it a go!

 

[mathjak107]

this is one of the biggest errors i see my co-workers and friends make all the time...they save up 2 or 300,000 and then figuring todays expenses tell me how they can live forever on it and invest it all in cd's to boot......they forget that by 24 years or so they need 2x the amount they are living on just to stay even....

 

[Gone4Good]

...they save up 2 or 300,000 and then figuring todays expenses tell me how they can live forever on it and invest it all in cd's to boot......

Yikes, where do you live?? 5% on 200,000-300,000 is $10,000-$15,000 per year! Either you are living large in Southeast Asia or dumpster diving for dinner in "anywhere" USA.

 

[Sam]

Yikes, where do you live??  5% on 200,000-300,000 is $10,000-$15,000 per year!  Either you are living large in Southeast Asia or dumpster diving for dinner in "anywhere" USA.

So true. 10 to 15K will afford you a comfortable life in Southeast Asia. Central America too.

 

[astromeria]

5% on 200,000-300,000 is $10,000-$15,000 per year!

But if you add Social Security at, say, another $10-15,000/year and maybe a small pension of $5000 on top, you're talking about $25-35,000, at age 62 anyhow.

 

[Martha]

I have a friend who is single, her children grown. She is in her mid 40s and makes about $22,000 a year. Not atypical in my city. I have been working with her on how to plan for retirement. We worked out a goal of saving about $150,000 so she could retire at 67. With social security, the possiblity of a reverse mortgage, she would do fine on the 150,000. Her savings rate is not at the level right now to get to her goal, but her house will be paid off in not many years and she can up her saving rate then.

She will be vulnerable to disaster, but she is planning and doing the best she can.

 

[mathjak107]

But if you add Social Security at, say, another $10-15,000/year and maybe a small pension of $5000 on top, you're talking about $25-35,000, at age 62 anyhow.

exactly that...it needs the social security added in...

 

[claire]

Well thats it then im not going to be able to ER in 4 years time, it will be more like 40