Hi:
How much will you need to retire? Let's throw out a couple of figures that seem to be natural targets.
One to Two Million: one to two million will include dining out and modest travel. At five percent interest per year, one million would yield $50,000 before tax. If you add in various pensions and have paid-for accommodation, and that income is split, there would be little tax. Of course you could play with the numbers and go up and down the scale, but interest rates are not that high at this point, and taxable at 50%.
Still, it costs around $10,000 to run a house for a year, and a trip could easily come in around $10,000. When you start looking at cars and insurance, dining out, entertainment, presents for your kids and grandkids, it's not much. Additional pensions will take your tax rate up as well.
It's easy to see that one million doesn't generate that much money. Dipping into capital would reduce your potential to earn money on that capital. This is why many people at the beginning stages of retirement still work a bit here and there to keep the cash flow flowing.
More tomorrow.
M.
retirement, travel and money
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