Its your money

Friday, June 23, 2006

How much do you need to retire

The good thing about having lot of money is that your money can work for you. I am a big fan of my money working for me so that I dont have to if I dont want to.

Just for theoretical purpose I have thought about how much I need to retire several times. The sum that I came up with was 3 million $ which was about 3 years ago when I was getting 3% interest rate. This is how I came up with this number.

I need 60K per year to live a decent life so I want my money to earn me 90K per year which is 150% of what I need. In this case I can save 30K-income tax and this way I not only get money to live but my savings also keep increasing. Increased savings will bring increased interest income to counter inflation.

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