Like everyone else, I have to assume that I need to take care of my own retirement. I only finished school 3 years ago, so I don't have a lot of money. However, by the time I retire, I'd like to have at least a million euros in my bank account. Bing! And I think you should too.
In the best case scenario, I assume a 5% annual interest rate. Given a million euros, that would translate to 50,000 euros a year in interests, or 4,166 euros a month. Given that inflation erodes the value of money, a euro today is worth more than a euro tomorrow. If we assume inflation will be 2.5% year over year, prices will double in 30 years. So by the time I retire, that 4,166 euros is the equivalent of 2,000 euros today. In other words, a million euros doesn't look like a crazy number to aim for.
In the worst case scenario, I assume a 1% annual interest rate on one million euros. In this scenario, I can't live on the interest rates and would need to eat slowly away from my one million euro bank account. Assuming that I withdraw the same 4,166 euros a month during my retirement, I'll burn through my one million euros in less than 25 years. Some people live longer than 25 years after they retire.
— Dries Buytaert
Dries Buytaert is an Open Source advocate and technology executive. More than 10,000 people are subscribed to his blog. Sign up to have new posts emailed to you or subscribe using RSS. Write to Dries Buytaert at email@example.com.