The 2% was made up for demonstration purposes, I'm not really sure how it plays out in the real world. It is a good question. Though consider this: $70K + 5%

The 2% was made up for demonstration purposes, I'm not really sure how it plays out in the real world. It is a good question. Though consider this: $70K + 5% [1] $50K living + 3% ----------- $2.5M saved after 30 years [2] $70K for life $20K living + 3% ----------- $2.7M saved after 30 years Even a decent rate may not be all it is cracked up to be. [1] For the first 15 years, whereafter you suggest it could plateau (at around $140K, in this case, which doesn't seem unreasonable given the current market and historic income increases) [2] Assumes all non-living expense allocated income is invested at 5%.