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Don’t Make Me Say I Told You So 55

use California as an example, the chart shows that investors in
California needs to earn 6.02% per year on their investments

just to pay their taxes and offset inflation.

Breaking Even in Retirement
Necessary Annual Returns after Taxes and Inflation

WA
NH
5.46% VT 5.56% ME
MT ND 6.03% 5.97%
5.86% 5.78%
OR MN
MA
6.00% ID 5.92% 5.76%
NY
WI
5.92% SD 5.85% 5.86%
RI
WY 5.46% MI 5.73%
5.46% 5.68% PA CT
IA 5.63% 5.75%
NV NE 6.00% OH NJ
DE 6.00%
5.46% UT 5.86% IL IN 5.84% 5.80%
5.87% CO 5.63% 5.65% WV DC
VA
CA 5.72% KS MO 5.84% 5.79% MD 5.98%
KY
6.02% 5.83% 5.81% 5.81% 5.73%
NC
TN 5.93%
AZ NM OK 5.46%
SC
AR
5.73% 5.76% 5.79% 5.87% 5.87%
MS AL GA
5.75% 5.75% 5.81%
TX
AK 5.46% LA
5.46% 5.81%
HI
5.95% FL
5.46%
Source: Nuveen Investments, 2008. The rates shown are the minimum returns needed to break even on a $10,000 investment
before sales charges and are based on a 28% federal tax rate and the maximum state tax rates (for states that have an income tax)
as of 2007. This is combined with a 4% rate of in ation.
If you need growth in your portfolio in retirement, you can
see that you need a fairly healthy rate of return to have a
growing nest egg. There is a rule of thumb, a finance term called
the “Rule of 72,” to calculate roughly how long it takes your
investment portfolio to double in value. Divide 72 by an interest

Chapter 3: You Must Have Growth In Your Portfolio