Modelling projected income, part two
Things change dramatically once you retire. First, your net worth on a salary:
Then, when you own a royalty-generating business:
In reality the scale is everything, but the point remains. With the business, you keep earning money even in retirement. On the salary, you’ve just jumped out of the plane - you need to have enough cash to support yourself until you die.
If you’re thinking about this, I strongly recommend making a spreadsheet so that you can stick in your own figures (expected investment return, salary growth, retirement year, etc) and see just how your financial situation will look in various points of your life. You’ll make horrible assumptions, but you’ll learn a lot.
Click here to download the spreadsheet I used. It’s set up to make the graphs look pretty rather than realistic, but the basic idea is sound. Put your own numbers in and see what happens.