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You seem to be assuming that the SF and Toronto workers will retire to the same place, so the extra savings of the SF worker will go further. Conversely, if you
by davidgay 10y ago
You seem to be assuming that the SF and Toronto workers will retire to the same place, so the extra savings of the SF worker will go further. Conversely, if you assume that the SF worker retires to a place with a 50% higher COL than the
Toronto worker, the difference disappears.
Personally, my backup plan is to retire to Bulgaria based on SF savings ;)
- lewisl9029 10y agoIf we take into account the time-value of money (which would be natural since we're talking about savings/investments that are subject to inflation and compound interest), higher income + higher COL remains favorable even if the cost of living ratio remains constant upon retirement.
- davidgay 10y agoHmm, no. Each per-year saved amount is compounded by the same multiplier k after N years (assuming the same interest rate), so if you start with 1.5x more, you end up with 1.5x more.
- lewisl9029 10y agoYou're totally right. I clearly wasn't thinking straight when I made that comment. There is still plenty of inherent value in accumulating wealth at a faster pace though.