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I had a thought, wondering if it could work. For anyone who has the means, you can set up a basic income for your children by contributing about 350/month from
by derekp7 8y ago
I had a thought, wondering if it could work. For anyone who has the means, you can set up a basic income for your children by contributing about 350/month from the time they are born, then assuming 7% growth there will be over 250K sitting in the trust fund. This is enough for $10,000 per year (4% drawdown rate), which will provide them a basic income just as they are getting out of college, and trying to find their way in the world.
The major problems I see with this, is inflation (adjust the monthly contributions to keep up with inflation), and for multiple kids $350/month will not be achievable for people of lower income.
- robhunter 8y agoI think the whole point of basic income is to help people that can't afford what you are proposing.
- nathanaldensr 8y ago> assuming 7% growth That's a big assumption, and doesn't take into account the reduced spending power (cost inflation) during that time.
- ahelwer 8y ago7% is in line with historical growth rate (below it, actually) Cost inflation is assumed to be 3%, which is why the withdrawal rate is 4% (4% + 3% = 7%) Anyway a 4% withdrawal rate is fine for 30 years (the duration of the trinity study) but a lower withdrawal rate (say, 3.25%) is needed for longer timespans like the 65-ish years of life expected of someone just graduating college, see this: https://earlyretirementnow.com/2016/12/07/the-ultimate-guide-to-safe-withdrawal-rates-part-1-intro/ https://earlyretirementnow.com/2016/12/07/the-ultimate-guide...