After a period of time, say 10 years, we want to have a $5,000 monthly income, after taxes, every year.

Suppose you had $2 million dollars in a savings account or CD that was paying 4% interest.

• $2,000,000 x .04 = $80,000 gross yearly income
• Assume you pay $20,000 / year income tax
• $80,000 - $20,000 = $60,000 / year net income
• $60,000 / 12 months = $5,000 per month income after taxes are paid

This income is a mathematical fact.

Suppose you have $100,000 in your IRA or 401K account right now. It is probably invested in cash or the stock market or mutual funds which is still the stock market. If you don't lose money in your account due to bad stocks, suppose you got a 5% return, which is generous by today's activity.

• $100,000 x .05 = $5,000 yearly gross appreciation
• $5,000 x 12 years = $60,000 - Account value would be $160,000
• $160,000 x .04 interest = $6,400 yearly gross income
• $6,400 / 12 months = $533 per month gross income - less $78 income tax
• $455 per month net income

Can you live on $455 per month? Suppose you withdrew $60,000 per year instead of collecting the interest? This $160,000 would last about 2 years. Why 2 years? Because you have to pay income tax when you withdraw it. This is what most will do and then try to live on Social Security after the 2 years.

Can you see why your current IRA will not support you when you need it most?
Those at Enron had tons of money in their 401K accounts and have zero now.
Most people will retire with little money to live on - don't be one of them.