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To: Lorenb420
A Gen Xer who makes $100,000 and wants to retire at 59 needs $7.3 million net of taxes to sustain that lifestyle.

Oh, I have got to see the economic model that predicts that a large principal placed into competently chosen low-risk investments will yield an annual return of only 1.37%*. My bank pays almost double that rate on my checking account.

An overestimate, acutally, since it presumes that you need $100,000/year forever and ever, amen.

124 posted on 10/10/2002 10:38:26 AM PDT by steve-b
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To: steve-b
Oh, I have got to see the economic model that predicts that a large principal placed into competently chosen low-risk investments will yield an annual return of only 1.37%*.

You need to remember to include the long term effects of inflation. For example, (the math may be slightly off, because this is a back of hte envelope calculation, but hte point remains):

If one assumes a long term 3.5% inflation rate, $7.3 million in 2037 dollars is only $2.2 million in today's terms. This means that the implied real rate of return on the investments is about 4.6%. Slightly conservative, but not unrealistic.

169 posted on 10/10/2002 4:57:33 PM PDT by the bottle let me down
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