“I Want to Have a MILLIoN DoLLARS When I Retire”

By Eric Grant CNW Columnist

In 37 years, I can’t tell you how many times I have heard someone say this. The retirement equation, not long after social security was established, assumed that every retiree would have social security, a pension, and whatever funds they may have saved.. Of course, having a million dollars saved would, by definition, make one a millionaire, which for generations, was a dream goal. However, in the context of retirement, what will a million dollars actually do?

Many people, these days, debate the viability of social security, and we shall leave that to the pundits. Defined benefit pension plans, where a retiree’s income is defined prior to retirement, usually as a percentage of income based on years of work, are not as prevalent

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as they once were. These considerations place more of the burden of your retirement on your ability to save. Financial services industry nerds, using their little fancy calculators, have determined that retirees can reasonably plan to withdraw any saved funds at a rate between 4 and 5%. This math would yield a retiree, who has accumulated one million dollars between 50 and 60 thousand dollars per year in income before taxes.

Income is the key word in retirement planning. No matter what plans you make for retirement, it has to yield income.There are fundamentally only 2 ways to create income where the 2 options are you working, or money working. So in making your retirement planning calculations, everything has to be converted to income, including that one million dollars. With