Just out of curiosity, decided to figure out a date when I can comfortably retire (not that I want to do so at this date, just when I am totally financially independent).
After I get married, hopefully the average annual income for the household is around $150,000 in current dollar. 33% goes to taxes, after tax income is $100,000. $1,500 for rent or house per month or $18,000 per year, $12,000 per year for two children's education, $10,000 per year for parents, that leaves $60,000. Let's split in the middle, half for current expense and half for retirement fund, that leaves $30,000 for saving.
Now suppose after retirement, the annual living expense is $40,000, let's take out risk in investing, taxes and inflation, and assume the real interest is 3% annually, then to live without fear of bankruptcy forever, we will need $1,373,333 [(x-40000)*1.03=x]. Saving $30,000 a year at compound interest rate 3% takes 26 years to get to $,1379,327. Suppose the family starts earning at my age = 28, that means I will have to wait until I am 54......
Let's have no kids, annual saving is $42,000, then the retirement date is move to the 20th year, or when I am 48. So it's save to say each kid will cost at least 3 years of two parents' lives, or 6 years of a parent's life!!! And this is assuming high income. Imagine when you are poor... Kids are expensive!!
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2 comments:
since it's assumed that the parents will live forever, 6 years is not such a big deal then...
If not assumed forever, kids cost even more!!
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