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"In order to get a good understanding of the purchasing power of your future retirement savings for today, you can do a “simple” calculation: Take your total re
by _lex 9y ago
"In order to get a good understanding of the purchasing power of your future retirement savings for today, you can do a “simple” calculation: Take your total retirement savings and multiply it by 3%. For example, if you have $1.25m (retirement savings), multiplied by 0.03% (inflation), you get $45,000 in inflation. Then you subtract that number from your total savings: $1.25m - $45k = $880k. This will give you a baseline to understand your financial situation."
Yeah, so $1.25m - $45K is NOT 880K.
Also, the effect of inflation compounds every year. So maybe you want to divide the nominal answers you are giving out by (1.03)^num-years-from-today to get the real value (in today's dollars) .
Please do better math.
- portman 9y agoalso $1.25MM x 3% = $37.5k Not $45k It is difficult to trust the calculator when arithmetic errors exist in the prose.
- cecilpl2 9y ago> Then you subtract that number from your total savings: You subtract your annual spending (3%) from your total invested? Why would you do that? To arrive at the total amount you'd have invested after you spend for a year? This paragraph reads like a markov chain generator.