Under the SR4 rules, you can purchase a permanent lifestyle by paying for 100 months of it. However, this doesn’t seem tie out to reality. I had the chance to talk to a fairly comfortable retiree recently, and got some interesting financial figures. He’s currently earning 4% APR on $1 million, which nets him $40,000 per year. That plus his Social Security, and he’s doing ok. But it got me thinking about the permanent lifestyle costs, and I think the canon figures are too low.

Tying this into the Trust Fund quality (SR4 Runner’s Companion, p. 101), and I’ve revised all of this into the following:

* Squatter: 5 BP | 10 KP – This pays out $500 per month for living expenses, along with $50 spending money. Investment needed is $165,000
* Low: 10 BP | 20 KP – This pays out $2,000 per month for expenses, along with $200 spending money. Investment needed is $660,000
* Middle: 20 BP | 40 KP – This pays out $5,000 per month for expenses, along with $500 spending money. Investment needed is $1.65 million
* High: 40 BP | 80 KP – This pays out $10,000 per month for expenses, along with $1,000 spending money. Investment needed is $3.3 million
* Luxury: 400 BP | 800 KP – This pays out $100,000 per month for expenses, along with $10,000 spending money. Investment needed is $33 million

So…either save your cash to reach the level you want to be at, and/or spend KP on it. Just think, for a mere 800 KP, you too can star on Lifestyles of the Rich and Famous.

If anyone has a finance degree (or works in the banking industry or some such), please feel free to chime in. This is just a fairly quick and simple revision of the rules, and I’d welcome some firmer numbers, if anyone can supply them.

Lifestyle has always been one of those big approximations. 1st ed Sprawl sites had a cost tables for apartments and houses.

Finance degree here.

The higher the interest earned, the lower the present value needs to be for a given annuity. An annuity is a stream of payments. These 3 variables are related and changing one will mean a change in at least one of the others to get them back in equilibrium.

Currently, interest rates, especially for savings are at or near historical lows, which is why your example of 4% is probably in a low risk, low interest investment, which is what someone at the end of their earning career is prudent to take to conserve their assets. They could put them in a higher return investment, but higher return usually means higher risk and if they took a significant hit, they are not in a position to go out and earn more to make up the loss. Your example is also based on never touching the principal, or you assumed that. If it is based on a 20 or 30 year payout, then the interest they are earning is lower than 4%.

We are currently in an odd time with interest rates for savings being so low. Reasons would sound almost like conspiracy theories or corporate and Wall Street greed and manipulations, but basically banks do not need to pay much for savings accounts because of the new banking laws allowing them to leverage themselves more, to cross state lines and merge so there are very few banks competing against one another for savings deposits (not quite monopoly, but not too far from collusion) and the low cost of borrowing funds.

The game uses roughly an 8.3% rate of return to get their numbers.
Historical rates of return for the stock market are around 10%, so if one used this rate, the present value would be even less.

When the game was first written, interest rates were much higher. I think I recall certificates of deposit paying over 5% and maybe 6 or 7% for long term CDs, mortgage rates were around 8-10% (some people still had 13-16% mortgages), checking accounts paid 1% or more, savings accounts could be found paying 3% and more.

So simplifying the cost of permanent lifestyles by just multiplying by 100, inferring an 8.3% rate of return is definitely in the ballpark.