How much Money Should I save in Order to Generate $1000/Month for the rest of my life?Saving for retirement: How much is enough?Is there a rule of thumb for how much to save into your pension for retirement?How much should a graduate student attempt to save?What should I consider when I try to invest my money today for a larger immediate income stream that will secure my retirement?Building financial independenceHow can I save money when I don't have any left over at the end of the month?Guide to save money in all-time lifeHow much do I need to save per month in an interest-bearing account to reach a certain account balance in a certain number of years?How to save money on bathroom overheads?
Search for something difficult to count/estimate
Power Adapter for Traveling to Scotland (I live in the US)
How are characteristic classes morphisms of infinite loop spaces? (if they are)
How to prove (A v B), (A → C), (B → D) therefore (C v D)
Minimum perfect squares needed to sum up to a target
Is negative resistance possible?
Would Great Old Ones care about the Blood War?
Found a minor bug, affecting 1% of users. What should QA do?
Are there any tricks to pushing a grand piano?
What’s the BrE for “shotgun wedding”?
What benefits are there to blocking most search engines?
Can you take the additional action from the fighter's Action Surge feature before you take your regular action?
SHA3-255, one bit less
What's the difference between motherboard and chassis?
Non-electric Laser
Why is the time of useful consciousness only seconds at high altitudes, when I can hold my breath much longer at ground level?
how would i use rm to delete all files without certain wildcard?
Scorched receptacle
Tikz diagonal filling pattern
How to catch creatures that can predict the next few minutes?
Quote to show students don't have to fear making mistakes
Is insurance company’s preferred auto shop biased?
Should I hang doors before or after drywall?
In 1700s, why was 'books that never read' grammatical?
How much Money Should I save in Order to Generate $1000/Month for the rest of my life?
Saving for retirement: How much is enough?Is there a rule of thumb for how much to save into your pension for retirement?How much should a graduate student attempt to save?What should I consider when I try to invest my money today for a larger immediate income stream that will secure my retirement?Building financial independenceHow can I save money when I don't have any left over at the end of the month?Guide to save money in all-time lifeHow much do I need to save per month in an interest-bearing account to reach a certain account balance in a certain number of years?How to save money on bathroom overheads?
.everyoneloves__top-leaderboard:empty,.everyoneloves__mid-leaderboard:empty,.everyoneloves__bot-mid-leaderboard:empty
margin-bottom:0;
How much money do I need to make in order to generate 1k/month for the rest of my life?
Is that even possible? If yes, in what way?
savings income financial-independence
New contributor
add a comment
|
How much money do I need to make in order to generate 1k/month for the rest of my life?
Is that even possible? If yes, in what way?
savings income financial-independence
New contributor
Have you considered a lifetime annuity? These are a product to specifically guarantee this life long.
– Vality
9 hours ago
4
Let's assume for the moment that you could live on $1000/month next year. Did you consider that $1000/month in 2050 won't have the same purchasing power as $1000/month in 2020? Any constant dollar amount per month might not be the right kind of goal.
– Chris W. Rea
8 hours ago
add a comment
|
How much money do I need to make in order to generate 1k/month for the rest of my life?
Is that even possible? If yes, in what way?
savings income financial-independence
New contributor
How much money do I need to make in order to generate 1k/month for the rest of my life?
Is that even possible? If yes, in what way?
savings income financial-independence
savings income financial-independence
New contributor
New contributor
edited 6 hours ago
Bob Baerker
26.6k3 gold badges39 silver badges65 bronze badges
26.6k3 gold badges39 silver badges65 bronze badges
New contributor
asked 10 hours ago
samouraysamouray
1093 bronze badges
1093 bronze badges
New contributor
New contributor
Have you considered a lifetime annuity? These are a product to specifically guarantee this life long.
– Vality
9 hours ago
4
Let's assume for the moment that you could live on $1000/month next year. Did you consider that $1000/month in 2050 won't have the same purchasing power as $1000/month in 2020? Any constant dollar amount per month might not be the right kind of goal.
– Chris W. Rea
8 hours ago
add a comment
|
Have you considered a lifetime annuity? These are a product to specifically guarantee this life long.
– Vality
9 hours ago
4
Let's assume for the moment that you could live on $1000/month next year. Did you consider that $1000/month in 2050 won't have the same purchasing power as $1000/month in 2020? Any constant dollar amount per month might not be the right kind of goal.
– Chris W. Rea
8 hours ago
Have you considered a lifetime annuity? These are a product to specifically guarantee this life long.
– Vality
9 hours ago
Have you considered a lifetime annuity? These are a product to specifically guarantee this life long.
– Vality
9 hours ago
4
4
Let's assume for the moment that you could live on $1000/month next year. Did you consider that $1000/month in 2050 won't have the same purchasing power as $1000/month in 2020? Any constant dollar amount per month might not be the right kind of goal.
– Chris W. Rea
8 hours ago
Let's assume for the moment that you could live on $1000/month next year. Did you consider that $1000/month in 2050 won't have the same purchasing power as $1000/month in 2020? Any constant dollar amount per month might not be the right kind of goal.
– Chris W. Rea
8 hours ago
add a comment
|
4 Answers
4
active
oldest
votes
What you are describing is a lifetime annuity. You pay a lump sum now and then get a fixed amount until you die.
Included in this calculation are estimates of (1) how long you will live (2) how much your money will earn when invested. Both of those are difficult to estimate, so in order to be confident you don't run out of money before dying, you must do one of the following:
- Massively overestimate how much you need to invest today. Lots of money will be left over, probably, when you die.
- Purchase an annuity from a financial intermediary. That's what they are for. That will offload the risk that you will live a long time to the annuity provider. Some people who buy the annuity will die early and others will die late, so you don't have to overestimate. The company bears the risks.
My suggestion is to call up your favorite financial services provider (Fidelity is who I use), tell them your age, and ask how much a lifetime annuity will cost (tell them when it will start paying as well). They will give you a better quote than random people on the internet will.
+1 but worth noting there are lots of annuity types. The opening paragraph describes "single premium immediate annuity" which has the feature of being the most commoditized and thus cheapest due to competition.
– user662852
2 hours ago
add a comment
|
There’s a general “rule of 4%” for investing. It means that a given sum invested in a total market Index fund can usually generate 4% a year indefinitely. Using that rule, $300,000 would generate $1000/mo.
The only Rule of 4% that I've ever seen is for retirees to withdraw 4% of their investment assets every year.
– RonJohn
4 hours ago
@RonJohn That seems applicable here...
– Michael
2 hours ago
@Michael not true, since Rocky's answer is all about interest income, whereas the Rule of 4% means to withdraw 4% of $300,000 leaving you with $288,000 which grows to $299,520. Withdraw another 12,000, let the remainder grow 4% and you've got $299,021 at the end of the second year. Rinse, wash and repeat. You can do that for a long time, but not forever. More importantly, you'll be withdrawing that $12,000 even during down swings like the dot com bust and 2007/2008.
– RonJohn
2 hours ago
add a comment
|
Simple math that all (and I mean all) depends on the interest rate.
- At 1%:
(1000 x 12)/0.02 = 1200000
- At 2%:
(1000 x 12)/0.02 = 600000
- At 3%:
(1000 x 12)/0.03 = 400000
- At 4%:
(1000 x 12)/0.04 = 300000
Of course, interest rates change, so you'd have to be conservative with your forecasting, and 1000/month isn't very much at all.
EDIT: the elephant in the room is inflation. 20 years from now, 1000 units of currency (said because the actual currency isn't relevant) won't buy as much as it does now.
This assumes the OP will live forever. The right calculation should use up all the principal by the end of his/her life.
– farnsy
5 hours ago
2
Knowing exactly how long you are going to live is a little tricky though, most people will admit. I wouldn't like to be 80 and completely out of money because I assumed I'd have died by then.
– Eric Nolan
5 hours ago
@farnsy so do all the answers, because as Eric Nolan mentioned, we don't know how long we're going to live.
– RonJohn
4 hours ago
It's much easier to estimate how long you will live than, for example, what the return on your investments will be over the rest of your life. You can build in some padding in case you are the exception. By mentioning this I didn't mean to imply your answer is worse than the others (in fact, it's better, in my view).
– farnsy
4 hours ago
add a comment
|
First, there's the issue of how much money you have to earn versus how much money you have for your endeavor after taxes. And then there's the issue of taxation on the yield. You can adjust the numbers per your current and anticipated futures tax brackets.
From a U.S. perspective:
Money market are variable. At the current rate of about 2%, you'd need $600k to generate $1k per month.
You could get about 6% from selective investment grade preferred stocks. Since they are tied to interest rates, that yield would vary modestly as rates change and issues are called. You'd need $200k for that. With some active swapping of issues (reallocation), in most years you could bump that yield to 10% and sometimes even better if there's an interest rate cycle (pre 2008). Preferred stock ETFs have provided about 5.5% return over the past 10 years.
There are a variety of annuities that provide lifetime income. A fixed annuity would be the obvious choice. You'd have to check to see what current rates are.
A variable annuity would be another possibility. The money would be placed in sub-accounts (similar to a mutual fund). I don't know what the current offerings are but historically the guaranteed deferred income component has been 5-6%. You'd get the higher of the two values (market investment versus the deferred guarantee). I had one with a 10% guaranteed deferred side growth. It's a lot more complex than a description here can provide but essentially you're paying higher fees and therefore under performing the market in return for guaranteed income for life.
add a comment
|
Your Answer
StackExchange.ready(function()
var channelOptions =
tags: "".split(" "),
id: "93"
;
initTagRenderer("".split(" "), "".split(" "), channelOptions);
StackExchange.using("externalEditor", function()
// Have to fire editor after snippets, if snippets enabled
if (StackExchange.settings.snippets.snippetsEnabled)
StackExchange.using("snippets", function()
createEditor();
);
else
createEditor();
);
function createEditor()
StackExchange.prepareEditor(
heartbeatType: 'answer',
autoActivateHeartbeat: false,
convertImagesToLinks: true,
noModals: true,
showLowRepImageUploadWarning: true,
reputationToPostImages: 10,
bindNavPrevention: true,
postfix: "",
imageUploader:
brandingHtml: "Powered by u003ca class="icon-imgur-white" href="https://imgur.com/"u003eu003c/au003e",
contentPolicyHtml: "User contributions licensed under u003ca href="https://creativecommons.org/licenses/by-sa/4.0/"u003ecc by-sa 4.0 with attribution requiredu003c/au003e u003ca href="https://stackoverflow.com/legal/content-policy"u003e(content policy)u003c/au003e",
allowUrls: true
,
noCode: true, onDemand: true,
discardSelector: ".discard-answer"
,immediatelyShowMarkdownHelp:true
);
);
samouray is a new contributor. Be nice, and check out our Code of Conduct.
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
StackExchange.ready(
function ()
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2fmoney.stackexchange.com%2fquestions%2f115221%2fhow-much-money-should-i-save-in-order-to-generate-1000-month-for-the-rest-of-my%23new-answer', 'question_page');
);
Post as a guest
Required, but never shown
4 Answers
4
active
oldest
votes
4 Answers
4
active
oldest
votes
active
oldest
votes
active
oldest
votes
What you are describing is a lifetime annuity. You pay a lump sum now and then get a fixed amount until you die.
Included in this calculation are estimates of (1) how long you will live (2) how much your money will earn when invested. Both of those are difficult to estimate, so in order to be confident you don't run out of money before dying, you must do one of the following:
- Massively overestimate how much you need to invest today. Lots of money will be left over, probably, when you die.
- Purchase an annuity from a financial intermediary. That's what they are for. That will offload the risk that you will live a long time to the annuity provider. Some people who buy the annuity will die early and others will die late, so you don't have to overestimate. The company bears the risks.
My suggestion is to call up your favorite financial services provider (Fidelity is who I use), tell them your age, and ask how much a lifetime annuity will cost (tell them when it will start paying as well). They will give you a better quote than random people on the internet will.
+1 but worth noting there are lots of annuity types. The opening paragraph describes "single premium immediate annuity" which has the feature of being the most commoditized and thus cheapest due to competition.
– user662852
2 hours ago
add a comment
|
What you are describing is a lifetime annuity. You pay a lump sum now and then get a fixed amount until you die.
Included in this calculation are estimates of (1) how long you will live (2) how much your money will earn when invested. Both of those are difficult to estimate, so in order to be confident you don't run out of money before dying, you must do one of the following:
- Massively overestimate how much you need to invest today. Lots of money will be left over, probably, when you die.
- Purchase an annuity from a financial intermediary. That's what they are for. That will offload the risk that you will live a long time to the annuity provider. Some people who buy the annuity will die early and others will die late, so you don't have to overestimate. The company bears the risks.
My suggestion is to call up your favorite financial services provider (Fidelity is who I use), tell them your age, and ask how much a lifetime annuity will cost (tell them when it will start paying as well). They will give you a better quote than random people on the internet will.
+1 but worth noting there are lots of annuity types. The opening paragraph describes "single premium immediate annuity" which has the feature of being the most commoditized and thus cheapest due to competition.
– user662852
2 hours ago
add a comment
|
What you are describing is a lifetime annuity. You pay a lump sum now and then get a fixed amount until you die.
Included in this calculation are estimates of (1) how long you will live (2) how much your money will earn when invested. Both of those are difficult to estimate, so in order to be confident you don't run out of money before dying, you must do one of the following:
- Massively overestimate how much you need to invest today. Lots of money will be left over, probably, when you die.
- Purchase an annuity from a financial intermediary. That's what they are for. That will offload the risk that you will live a long time to the annuity provider. Some people who buy the annuity will die early and others will die late, so you don't have to overestimate. The company bears the risks.
My suggestion is to call up your favorite financial services provider (Fidelity is who I use), tell them your age, and ask how much a lifetime annuity will cost (tell them when it will start paying as well). They will give you a better quote than random people on the internet will.
What you are describing is a lifetime annuity. You pay a lump sum now and then get a fixed amount until you die.
Included in this calculation are estimates of (1) how long you will live (2) how much your money will earn when invested. Both of those are difficult to estimate, so in order to be confident you don't run out of money before dying, you must do one of the following:
- Massively overestimate how much you need to invest today. Lots of money will be left over, probably, when you die.
- Purchase an annuity from a financial intermediary. That's what they are for. That will offload the risk that you will live a long time to the annuity provider. Some people who buy the annuity will die early and others will die late, so you don't have to overestimate. The company bears the risks.
My suggestion is to call up your favorite financial services provider (Fidelity is who I use), tell them your age, and ask how much a lifetime annuity will cost (tell them when it will start paying as well). They will give you a better quote than random people on the internet will.
answered 3 hours ago
farnsyfarnsy
13k24 silver badges45 bronze badges
13k24 silver badges45 bronze badges
+1 but worth noting there are lots of annuity types. The opening paragraph describes "single premium immediate annuity" which has the feature of being the most commoditized and thus cheapest due to competition.
– user662852
2 hours ago
add a comment
|
+1 but worth noting there are lots of annuity types. The opening paragraph describes "single premium immediate annuity" which has the feature of being the most commoditized and thus cheapest due to competition.
– user662852
2 hours ago
+1 but worth noting there are lots of annuity types. The opening paragraph describes "single premium immediate annuity" which has the feature of being the most commoditized and thus cheapest due to competition.
– user662852
2 hours ago
+1 but worth noting there are lots of annuity types. The opening paragraph describes "single premium immediate annuity" which has the feature of being the most commoditized and thus cheapest due to competition.
– user662852
2 hours ago
add a comment
|
There’s a general “rule of 4%” for investing. It means that a given sum invested in a total market Index fund can usually generate 4% a year indefinitely. Using that rule, $300,000 would generate $1000/mo.
The only Rule of 4% that I've ever seen is for retirees to withdraw 4% of their investment assets every year.
– RonJohn
4 hours ago
@RonJohn That seems applicable here...
– Michael
2 hours ago
@Michael not true, since Rocky's answer is all about interest income, whereas the Rule of 4% means to withdraw 4% of $300,000 leaving you with $288,000 which grows to $299,520. Withdraw another 12,000, let the remainder grow 4% and you've got $299,021 at the end of the second year. Rinse, wash and repeat. You can do that for a long time, but not forever. More importantly, you'll be withdrawing that $12,000 even during down swings like the dot com bust and 2007/2008.
– RonJohn
2 hours ago
add a comment
|
There’s a general “rule of 4%” for investing. It means that a given sum invested in a total market Index fund can usually generate 4% a year indefinitely. Using that rule, $300,000 would generate $1000/mo.
The only Rule of 4% that I've ever seen is for retirees to withdraw 4% of their investment assets every year.
– RonJohn
4 hours ago
@RonJohn That seems applicable here...
– Michael
2 hours ago
@Michael not true, since Rocky's answer is all about interest income, whereas the Rule of 4% means to withdraw 4% of $300,000 leaving you with $288,000 which grows to $299,520. Withdraw another 12,000, let the remainder grow 4% and you've got $299,021 at the end of the second year. Rinse, wash and repeat. You can do that for a long time, but not forever. More importantly, you'll be withdrawing that $12,000 even during down swings like the dot com bust and 2007/2008.
– RonJohn
2 hours ago
add a comment
|
There’s a general “rule of 4%” for investing. It means that a given sum invested in a total market Index fund can usually generate 4% a year indefinitely. Using that rule, $300,000 would generate $1000/mo.
There’s a general “rule of 4%” for investing. It means that a given sum invested in a total market Index fund can usually generate 4% a year indefinitely. Using that rule, $300,000 would generate $1000/mo.
answered 9 hours ago
RockyRocky
21.5k4 gold badges56 silver badges86 bronze badges
21.5k4 gold badges56 silver badges86 bronze badges
The only Rule of 4% that I've ever seen is for retirees to withdraw 4% of their investment assets every year.
– RonJohn
4 hours ago
@RonJohn That seems applicable here...
– Michael
2 hours ago
@Michael not true, since Rocky's answer is all about interest income, whereas the Rule of 4% means to withdraw 4% of $300,000 leaving you with $288,000 which grows to $299,520. Withdraw another 12,000, let the remainder grow 4% and you've got $299,021 at the end of the second year. Rinse, wash and repeat. You can do that for a long time, but not forever. More importantly, you'll be withdrawing that $12,000 even during down swings like the dot com bust and 2007/2008.
– RonJohn
2 hours ago
add a comment
|
The only Rule of 4% that I've ever seen is for retirees to withdraw 4% of their investment assets every year.
– RonJohn
4 hours ago
@RonJohn That seems applicable here...
– Michael
2 hours ago
@Michael not true, since Rocky's answer is all about interest income, whereas the Rule of 4% means to withdraw 4% of $300,000 leaving you with $288,000 which grows to $299,520. Withdraw another 12,000, let the remainder grow 4% and you've got $299,021 at the end of the second year. Rinse, wash and repeat. You can do that for a long time, but not forever. More importantly, you'll be withdrawing that $12,000 even during down swings like the dot com bust and 2007/2008.
– RonJohn
2 hours ago
The only Rule of 4% that I've ever seen is for retirees to withdraw 4% of their investment assets every year.
– RonJohn
4 hours ago
The only Rule of 4% that I've ever seen is for retirees to withdraw 4% of their investment assets every year.
– RonJohn
4 hours ago
@RonJohn That seems applicable here...
– Michael
2 hours ago
@RonJohn That seems applicable here...
– Michael
2 hours ago
@Michael not true, since Rocky's answer is all about interest income, whereas the Rule of 4% means to withdraw 4% of $300,000 leaving you with $288,000 which grows to $299,520. Withdraw another 12,000, let the remainder grow 4% and you've got $299,021 at the end of the second year. Rinse, wash and repeat. You can do that for a long time, but not forever. More importantly, you'll be withdrawing that $12,000 even during down swings like the dot com bust and 2007/2008.
– RonJohn
2 hours ago
@Michael not true, since Rocky's answer is all about interest income, whereas the Rule of 4% means to withdraw 4% of $300,000 leaving you with $288,000 which grows to $299,520. Withdraw another 12,000, let the remainder grow 4% and you've got $299,021 at the end of the second year. Rinse, wash and repeat. You can do that for a long time, but not forever. More importantly, you'll be withdrawing that $12,000 even during down swings like the dot com bust and 2007/2008.
– RonJohn
2 hours ago
add a comment
|
Simple math that all (and I mean all) depends on the interest rate.
- At 1%:
(1000 x 12)/0.02 = 1200000
- At 2%:
(1000 x 12)/0.02 = 600000
- At 3%:
(1000 x 12)/0.03 = 400000
- At 4%:
(1000 x 12)/0.04 = 300000
Of course, interest rates change, so you'd have to be conservative with your forecasting, and 1000/month isn't very much at all.
EDIT: the elephant in the room is inflation. 20 years from now, 1000 units of currency (said because the actual currency isn't relevant) won't buy as much as it does now.
This assumes the OP will live forever. The right calculation should use up all the principal by the end of his/her life.
– farnsy
5 hours ago
2
Knowing exactly how long you are going to live is a little tricky though, most people will admit. I wouldn't like to be 80 and completely out of money because I assumed I'd have died by then.
– Eric Nolan
5 hours ago
@farnsy so do all the answers, because as Eric Nolan mentioned, we don't know how long we're going to live.
– RonJohn
4 hours ago
It's much easier to estimate how long you will live than, for example, what the return on your investments will be over the rest of your life. You can build in some padding in case you are the exception. By mentioning this I didn't mean to imply your answer is worse than the others (in fact, it's better, in my view).
– farnsy
4 hours ago
add a comment
|
Simple math that all (and I mean all) depends on the interest rate.
- At 1%:
(1000 x 12)/0.02 = 1200000
- At 2%:
(1000 x 12)/0.02 = 600000
- At 3%:
(1000 x 12)/0.03 = 400000
- At 4%:
(1000 x 12)/0.04 = 300000
Of course, interest rates change, so you'd have to be conservative with your forecasting, and 1000/month isn't very much at all.
EDIT: the elephant in the room is inflation. 20 years from now, 1000 units of currency (said because the actual currency isn't relevant) won't buy as much as it does now.
This assumes the OP will live forever. The right calculation should use up all the principal by the end of his/her life.
– farnsy
5 hours ago
2
Knowing exactly how long you are going to live is a little tricky though, most people will admit. I wouldn't like to be 80 and completely out of money because I assumed I'd have died by then.
– Eric Nolan
5 hours ago
@farnsy so do all the answers, because as Eric Nolan mentioned, we don't know how long we're going to live.
– RonJohn
4 hours ago
It's much easier to estimate how long you will live than, for example, what the return on your investments will be over the rest of your life. You can build in some padding in case you are the exception. By mentioning this I didn't mean to imply your answer is worse than the others (in fact, it's better, in my view).
– farnsy
4 hours ago
add a comment
|
Simple math that all (and I mean all) depends on the interest rate.
- At 1%:
(1000 x 12)/0.02 = 1200000
- At 2%:
(1000 x 12)/0.02 = 600000
- At 3%:
(1000 x 12)/0.03 = 400000
- At 4%:
(1000 x 12)/0.04 = 300000
Of course, interest rates change, so you'd have to be conservative with your forecasting, and 1000/month isn't very much at all.
EDIT: the elephant in the room is inflation. 20 years from now, 1000 units of currency (said because the actual currency isn't relevant) won't buy as much as it does now.
Simple math that all (and I mean all) depends on the interest rate.
- At 1%:
(1000 x 12)/0.02 = 1200000
- At 2%:
(1000 x 12)/0.02 = 600000
- At 3%:
(1000 x 12)/0.03 = 400000
- At 4%:
(1000 x 12)/0.04 = 300000
Of course, interest rates change, so you'd have to be conservative with your forecasting, and 1000/month isn't very much at all.
EDIT: the elephant in the room is inflation. 20 years from now, 1000 units of currency (said because the actual currency isn't relevant) won't buy as much as it does now.
edited 3 hours ago
answered 9 hours ago
RonJohnRonJohn
22.7k6 gold badges42 silver badges88 bronze badges
22.7k6 gold badges42 silver badges88 bronze badges
This assumes the OP will live forever. The right calculation should use up all the principal by the end of his/her life.
– farnsy
5 hours ago
2
Knowing exactly how long you are going to live is a little tricky though, most people will admit. I wouldn't like to be 80 and completely out of money because I assumed I'd have died by then.
– Eric Nolan
5 hours ago
@farnsy so do all the answers, because as Eric Nolan mentioned, we don't know how long we're going to live.
– RonJohn
4 hours ago
It's much easier to estimate how long you will live than, for example, what the return on your investments will be over the rest of your life. You can build in some padding in case you are the exception. By mentioning this I didn't mean to imply your answer is worse than the others (in fact, it's better, in my view).
– farnsy
4 hours ago
add a comment
|
This assumes the OP will live forever. The right calculation should use up all the principal by the end of his/her life.
– farnsy
5 hours ago
2
Knowing exactly how long you are going to live is a little tricky though, most people will admit. I wouldn't like to be 80 and completely out of money because I assumed I'd have died by then.
– Eric Nolan
5 hours ago
@farnsy so do all the answers, because as Eric Nolan mentioned, we don't know how long we're going to live.
– RonJohn
4 hours ago
It's much easier to estimate how long you will live than, for example, what the return on your investments will be over the rest of your life. You can build in some padding in case you are the exception. By mentioning this I didn't mean to imply your answer is worse than the others (in fact, it's better, in my view).
– farnsy
4 hours ago
This assumes the OP will live forever. The right calculation should use up all the principal by the end of his/her life.
– farnsy
5 hours ago
This assumes the OP will live forever. The right calculation should use up all the principal by the end of his/her life.
– farnsy
5 hours ago
2
2
Knowing exactly how long you are going to live is a little tricky though, most people will admit. I wouldn't like to be 80 and completely out of money because I assumed I'd have died by then.
– Eric Nolan
5 hours ago
Knowing exactly how long you are going to live is a little tricky though, most people will admit. I wouldn't like to be 80 and completely out of money because I assumed I'd have died by then.
– Eric Nolan
5 hours ago
@farnsy so do all the answers, because as Eric Nolan mentioned, we don't know how long we're going to live.
– RonJohn
4 hours ago
@farnsy so do all the answers, because as Eric Nolan mentioned, we don't know how long we're going to live.
– RonJohn
4 hours ago
It's much easier to estimate how long you will live than, for example, what the return on your investments will be over the rest of your life. You can build in some padding in case you are the exception. By mentioning this I didn't mean to imply your answer is worse than the others (in fact, it's better, in my view).
– farnsy
4 hours ago
It's much easier to estimate how long you will live than, for example, what the return on your investments will be over the rest of your life. You can build in some padding in case you are the exception. By mentioning this I didn't mean to imply your answer is worse than the others (in fact, it's better, in my view).
– farnsy
4 hours ago
add a comment
|
First, there's the issue of how much money you have to earn versus how much money you have for your endeavor after taxes. And then there's the issue of taxation on the yield. You can adjust the numbers per your current and anticipated futures tax brackets.
From a U.S. perspective:
Money market are variable. At the current rate of about 2%, you'd need $600k to generate $1k per month.
You could get about 6% from selective investment grade preferred stocks. Since they are tied to interest rates, that yield would vary modestly as rates change and issues are called. You'd need $200k for that. With some active swapping of issues (reallocation), in most years you could bump that yield to 10% and sometimes even better if there's an interest rate cycle (pre 2008). Preferred stock ETFs have provided about 5.5% return over the past 10 years.
There are a variety of annuities that provide lifetime income. A fixed annuity would be the obvious choice. You'd have to check to see what current rates are.
A variable annuity would be another possibility. The money would be placed in sub-accounts (similar to a mutual fund). I don't know what the current offerings are but historically the guaranteed deferred income component has been 5-6%. You'd get the higher of the two values (market investment versus the deferred guarantee). I had one with a 10% guaranteed deferred side growth. It's a lot more complex than a description here can provide but essentially you're paying higher fees and therefore under performing the market in return for guaranteed income for life.
add a comment
|
First, there's the issue of how much money you have to earn versus how much money you have for your endeavor after taxes. And then there's the issue of taxation on the yield. You can adjust the numbers per your current and anticipated futures tax brackets.
From a U.S. perspective:
Money market are variable. At the current rate of about 2%, you'd need $600k to generate $1k per month.
You could get about 6% from selective investment grade preferred stocks. Since they are tied to interest rates, that yield would vary modestly as rates change and issues are called. You'd need $200k for that. With some active swapping of issues (reallocation), in most years you could bump that yield to 10% and sometimes even better if there's an interest rate cycle (pre 2008). Preferred stock ETFs have provided about 5.5% return over the past 10 years.
There are a variety of annuities that provide lifetime income. A fixed annuity would be the obvious choice. You'd have to check to see what current rates are.
A variable annuity would be another possibility. The money would be placed in sub-accounts (similar to a mutual fund). I don't know what the current offerings are but historically the guaranteed deferred income component has been 5-6%. You'd get the higher of the two values (market investment versus the deferred guarantee). I had one with a 10% guaranteed deferred side growth. It's a lot more complex than a description here can provide but essentially you're paying higher fees and therefore under performing the market in return for guaranteed income for life.
add a comment
|
First, there's the issue of how much money you have to earn versus how much money you have for your endeavor after taxes. And then there's the issue of taxation on the yield. You can adjust the numbers per your current and anticipated futures tax brackets.
From a U.S. perspective:
Money market are variable. At the current rate of about 2%, you'd need $600k to generate $1k per month.
You could get about 6% from selective investment grade preferred stocks. Since they are tied to interest rates, that yield would vary modestly as rates change and issues are called. You'd need $200k for that. With some active swapping of issues (reallocation), in most years you could bump that yield to 10% and sometimes even better if there's an interest rate cycle (pre 2008). Preferred stock ETFs have provided about 5.5% return over the past 10 years.
There are a variety of annuities that provide lifetime income. A fixed annuity would be the obvious choice. You'd have to check to see what current rates are.
A variable annuity would be another possibility. The money would be placed in sub-accounts (similar to a mutual fund). I don't know what the current offerings are but historically the guaranteed deferred income component has been 5-6%. You'd get the higher of the two values (market investment versus the deferred guarantee). I had one with a 10% guaranteed deferred side growth. It's a lot more complex than a description here can provide but essentially you're paying higher fees and therefore under performing the market in return for guaranteed income for life.
First, there's the issue of how much money you have to earn versus how much money you have for your endeavor after taxes. And then there's the issue of taxation on the yield. You can adjust the numbers per your current and anticipated futures tax brackets.
From a U.S. perspective:
Money market are variable. At the current rate of about 2%, you'd need $600k to generate $1k per month.
You could get about 6% from selective investment grade preferred stocks. Since they are tied to interest rates, that yield would vary modestly as rates change and issues are called. You'd need $200k for that. With some active swapping of issues (reallocation), in most years you could bump that yield to 10% and sometimes even better if there's an interest rate cycle (pre 2008). Preferred stock ETFs have provided about 5.5% return over the past 10 years.
There are a variety of annuities that provide lifetime income. A fixed annuity would be the obvious choice. You'd have to check to see what current rates are.
A variable annuity would be another possibility. The money would be placed in sub-accounts (similar to a mutual fund). I don't know what the current offerings are but historically the guaranteed deferred income component has been 5-6%. You'd get the higher of the two values (market investment versus the deferred guarantee). I had one with a 10% guaranteed deferred side growth. It's a lot more complex than a description here can provide but essentially you're paying higher fees and therefore under performing the market in return for guaranteed income for life.
edited 1 hour ago
answered 6 hours ago
Bob BaerkerBob Baerker
26.6k3 gold badges39 silver badges65 bronze badges
26.6k3 gold badges39 silver badges65 bronze badges
add a comment
|
add a comment
|
samouray is a new contributor. Be nice, and check out our Code of Conduct.
samouray is a new contributor. Be nice, and check out our Code of Conduct.
samouray is a new contributor. Be nice, and check out our Code of Conduct.
samouray is a new contributor. Be nice, and check out our Code of Conduct.
Thanks for contributing an answer to Personal Finance & Money Stack Exchange!
- Please be sure to answer the question. Provide details and share your research!
But avoid …
- Asking for help, clarification, or responding to other answers.
- Making statements based on opinion; back them up with references or personal experience.
To learn more, see our tips on writing great answers.
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
StackExchange.ready(
function ()
StackExchange.openid.initPostLogin('.new-post-login', 'https%3a%2f%2fmoney.stackexchange.com%2fquestions%2f115221%2fhow-much-money-should-i-save-in-order-to-generate-1000-month-for-the-rest-of-my%23new-answer', 'question_page');
);
Post as a guest
Required, but never shown
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
Sign up or log in
StackExchange.ready(function ()
StackExchange.helpers.onClickDraftSave('#login-link');
);
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Sign up using Google
Sign up using Facebook
Sign up using Email and Password
Post as a guest
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Required, but never shown
Have you considered a lifetime annuity? These are a product to specifically guarantee this life long.
– Vality
9 hours ago
4
Let's assume for the moment that you could live on $1000/month next year. Did you consider that $1000/month in 2050 won't have the same purchasing power as $1000/month in 2020? Any constant dollar amount per month might not be the right kind of goal.
– Chris W. Rea
8 hours ago