Sat 6 March 2010 - Who wants to be a millionaire?
Investment and pension income for retirees with smaller savings means they are only marginally worse off than those with seven-figure sums. Investors who work hard to provide for their retirement get by with not much more than those who don't.
Scott Francis is an independent financial analyst. You can hear him on Warren's show every second Saturday. This week he answers the question 'how am I progressing financially - will I be able to retire in comfort?'
While there is a reasonable amount of information around about how much a person might need for a self funded retirement, usually somewhere around 17 to 20 times their hoped for retirement income, Scott says he is not aware of any models that try to measure the way this wealth is built over time.
Thomas Stanley and William Danko, in their book 'The Millionaire Next Door', propose a formula for a persons net wealth based on a their age and income. They suggest that a person's net wealth should be:
Age multiplied by Pre Tax Household Income divided by 10.
You can hear Scott explain why when he talks to Warren this Saturday on 612 ABC Brisbane.
You can read all about Scott's latest theory here:
You can also see how your accumulated wealth might affect your age pension: