The Taxpayers United of America just released data on pension payouts in Michigan. Remember, pensions to retired public employees are paid for by YOU, the taxpayer.
Here are a few examples from the Taxpayers United of America web site:
- The top 100 retired teachers are collecting at least $90,000 per year in pension benefits
- The top 25 Ingham County retirees are collecting between $55,000 and $64,000. (This is based on average annual salaries of $49,000 and retirment at age 55)
- The top 25 Kent County retirees are collecting between $67,000 and $96,000, annually.
Assume you want to receive $100,000 per year, like over 50 retired teachers in Michigan. How much would you need to save every year? You can use a payroll deduction into a 401k type savings plan. This way, you can use pre-tax dollars. Now, let's assume you can earn an average of 5% interest every year on the money you save. Let's also assume that you want to retire at age 55 and have a perpetual fund of cash to pay you $100,000 per year.
Using those assumptions, you would need to start working at age 20, work and save for 35 years, and put away $22,143.42 each year (1845.25 per month) for your retirement. When you reach age 55, you will have $2,000,000 in the bank, from which you can draw $100,000 per year. If the principle continues to earn 5% per year, you should still have a bundle left over at age 85 to leave to your children or to charity.