That $2 million also happens to be the implied booty of your average California policeman who retires at age 55. One might guess that a $2 million stash would be in the 95th percentile for the 77 million baby boomers who will soon face retirement. But that’s a pitiful yield, isn’t it? It’s sure to disappoint the millions of baby boomers who will soon enter retirement with nothing more than their desiccated 401(k)s–down 30% on average from 30 months ago–and a bit of Social Security.īased on this small but unfortunately realistic 4% return, an $80,000 annual pension payout implies a rather large pot of money behind it–$2 million, to be precise. Investment pros such as my friend Barry Glassman of Glassman Wealth Services say 4% is a good, safe return today.
#MILLIONAIRE NEXT DOOR CALCULATOR FULL#
They are America’s fastest-growing group of millionaires.ĭoubt it? Then ask yourself: What is the net present value of an $80,000 annual pension payout with additional full health benefits? Working backward the total NPV would depend on expected returns of a basket of safe investments–blue-chip stocks, dividends and U.S. By my calculations government workers make more than twice as much. It’s said that government workers now make, on average, 30% more than private-sector workers. The reason we stand corrected is because of the math that Forbes‘ Rich Karlgaard did to find out what the effective net present value of the retirement nest egg of a simple California state police officer would have to be to provide them with an annual income of $80,000 for the rest of their lives after they retire at Age 55 in The Millionaire Cop Next Door: In truth, most bureaucrats can effectively become millionaires through their extremely generous and taxpayer-guaranteed public employee pension schemes, which accounts for the largest portion of the outsized compensation of public employees compared to their peers in the private sector. Today, we stand corrected, because it turns out that is just one way that public servants can get rich. We concluded that was “how ‘public servants’ get rich. In doing that, we noted the role of the “corporate cronies”, who use push for government regulation as a means to put their market competitors at a disadvantage so they can juice their profits, with a portion going into the pockets of their “public servant” benefactors, which they use to advance their own political and personal interests. Not long ago, we looked at the situation where politicians and bureaucrats use their authority to regulate economic activity to impose costs on regular Americans.