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Put it this way, $2.5K a year for 45 years at 8% interest would leave you with $1 million in the bank.>>>>>>>>>>>>>

And what will that buy after 45 years of inflation which the government tries to hide by juggling the figures? I am only 61 years old and I remember when a person who had one tenth of that in the bank at any age would have thought that work was purely voluntary for them. A projected lifetime of earnings back then amounts to one good year now.

I remember when cokes and phone calls were a nickel. Inflation is the hidden tax. Inflation since Ronald Reagan has been relatively low. The worst years were in the 70s, especially under Jimmy Carter, with double digit rates and stagflation. Keynesian economics failed again. Margaret Thatcher and Ronald Reagan taught us that the money supply was the key to controlling inflation.

And what will that buy after 45 years of inflation which the government tries to hide by juggling the figures? I am only 61 years old and I remember when a person who had one tenth of that in the bank at any age would have thought that work was purely voluntary for them. A projected lifetime of earnings back then amounts to one good year now.

That amount can be figured, with a few assumptions:

Average inflation: 3.5% (that's been the rate from 1915-present)
Amount Needed to Retire Comfortably in 2006 Dollars: $50,000 (just for starters...substitute your own number if you like)
Inflation Multiplier: 4.8 (I believe multiplying today's amount times this number will get you a comparable amount 45 years from now, but it's been awhile, someone may want to check that calculation).

If we use $50K as the base amount, you'd need around $240K annually to retire at the same level of spending in 45 years. So if your investment is yielding a 6% return, you'd actually need $4 million in the bank to live on interest alone.

Given all this, a 25 year old planning to retire in 45 years with a goal of $4 million in the bank will need to contribute $10,349 annually and achieve an 8% return.

(Obviously, drawing on the principle as well as the interest/yield would require less savings.)