Can't Get My Saving Figures To Match Up

[dlmonnink]

Hi Guys

MMM said that saving 75% of your salary at inflation + 5% will allow you to retire after 7 years.

I clear R30 000 (South African Rand) monthly giving me a saving of R22 500 per month.  Inflation is officially 6% making my target interest rate 11%.

Using these figures:

Salary Per Year:	R360 000,00
Salary Per Month:	R 30 000,00
75% Saving Per Month:	R 22 500,00
7 Years/84 Months Contribution (At Inflation (6%) + 5%)	R 2 828 136,14
4% Yearly Draw Rate	R 113 125,45
Minus  15% Capital Gains Tax	R 96 156,63
Monthly Amount	R 8 013,05

As you can see R8013.05 is a far cry from R30 000.00. Am I working this out wrong?

[Wanderer]

I think the idea is that you are not seeking to replace all of your monthly income, since you're saving most of it and not living on it, you're replacing the amount that you're living on.  That would be 25% of 30,000, which is 7,500.  Your 8,000 works out to replace that. 

Whether you want to live this lifestyle indefinitely is the other question. 

[dlmonnink]

Heh that does make sense - didn't think of it like that! Thanks for pointing that out.