Why "a Million"?

December 5, 2008

Why do I set my goal at one million? Because I’m expected to live over 100.

If I’m lucky, I could earn about 8% on my investments. One million dollars yields $80,000 annual income. Take away $20,000 or so in tax, leaving me with $60,000.

$60,000 annual income offers a comfortable life for frugal people. But one must factor in inflation and economic uncertainty. What if there are more recessions? If I’m lucky not to lose most of it, I could get 2.5% earning from interest – which gives me about $20,000 a year after tax. What if I get really sick? What about children?

One million is really not a greedy goal. It was actually something I heard on a business program. It is a general rule of thumb that most people would need one million to retire.

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