assuming i retire at 70 and die at 92, that is 22 years of self sufficiency. how much principal would i need to retire?
I was always of the impression that people saved 5k a year or so for 40 years, then had a 0.5 million nest egg at retirement. However i just read a stat that says only 2% of all retirees are self sufficient, about 45% have to rely on family members to take care of them. The breakdown of income for the average retiree was something like 40% social security, 20% investments, 20% work pension, 20% outside sources.
So, assuming social security is still there when i retire (in about 45 years) and pays about 40% of my cost of living (maybe 20k post tax in todays wages), that leaves 12k a year of tax free money i’d need. So how much principal would i need to obtain that in todays money? $200k? Right now i’m studying nursing but am thinking of going into engineering later in life. An Engineer can make 60k a year, which is 40k post tax. If i save 5-6k a year of that 40k that should be enough for a principal that will cover 50% of my living expenses, but i am not 100% sure.
In a way its somewhat useless to plan like this, who knows what the life expectancy will be when i’m 70, or what medical costs will look like. Maybe they’ll be insanely high, maybe medicine will socialize and they will go down.