If you have a fixed income that was going to continue for the rest of your life, what portion would you need to save to keep it consistent?
For example, if you were to get 100,000 per year non indexed, how much would you need to save so that the total amount you lived on did not degrade? If the inflation rate is 2%, then next year the amount is not as valuable to you, but if you spent less and saved some, how much would you need to save? I would be happy to see some formulas.
A few assumptions:
- No draw down is included; it should last forever.
- Interest rates and inflation rates can vary.