Can anyone help me figure out how much I have to save in order to retire, with my pension as a factor? I will get approximately 24000/year when I retire, but there will be no COLA. Initially, I will be able to live entirely on the pension (for a couple of years), but due to inflation the value of that 24000 will decrease every year. How do I calculate how much I have to save to off-set the loss due to inflation?
Essentially you'll want to find out how much per year that loses in real value, then calculate what sort of stache you need to compensate for that loss.
You can take a guess at inflation, or use historical inflation via something like
www.cfiresim.comIf, for example, I put in the all default scenario (75/25 stocks/bonds allocation, default fees, etc.), retiring 2014, change spending to 24k/year, start pension in 2014 for 24k that is not inflation adjusted, a $300k portfolio gives you the typical 95% success rate.
This doesn't include any Social Security, which will help as well.
Go run your own scenarios there and play around with different portfolio amounts, but I'd say somewhere in that 300k neighborhood should be good.
EDIT: CFireSim suggestion beat by justchristine while I was typing up this response and playing with the numbers. Good call, jc. :)
EDIT 2: May have found a cfiresim bug around non-cola'd pensions. Posting on their forums about it. Hold results pending that.
What pension do you have, that isn't index-linked?
Not sure how it's relevant.. There are lots that don't.