How much do you plan to spend annually when you are retired, including the cost of health care and medicine, housing and cars….. In other words, assuming you pay 100% out of your own pocket for the stuff and services you want? Let’s call that $X.
How many years after you retire are you prepared to throw in the towel and become indigent? Let’s call that Y years.
How much do you contribute to society annually now, measured by your average after-tax income, excluding investment income? Let’s call that $Z.
How much do you take from society now, measured by your annual spending, including the annual average of occasional big purchases like cars or surgeries or weddings or fees on home purchases etc…? Let’s call that $W.
Finally, how many more years are you going to work (at a full-time regular rate of pay)? Let’s call that V years.
In my calculations, you’ll need $ X times Y for your retirement, in today’s dollars.
In my calculations, you’re going to have $(Z-W) times V when you retire, in today’s dollars.
