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Mr. and Mrs. Wannabe Retiree Financial goals!

I’m 40 right now and our new goal for both myself and Mrs. Wannabe Retiree is to retire by the time I am 50, she will be 44. You may wonder if we are on track. I wonder that too. This is my first post on the subject and so only time will tell.  I may change my mind on the final numbers if life takes me that way but here are the goals as of right now.

Our Financial Goals to retire by 50:
401k: $700,000
ETF: $400,000
Cash: $100,000
Roth IRA: Don’t care!

Am I crazy? Maybe. I’m sure if there is anyone that does reads this site, they may think so. But, I can’t concern myself with them, unless they can help me get there. How far along am I? Well, that is a complicated answer in some aspects but I will try to break it down.

Current Financial State:
401k: about 26% there
ETF: about 2% there
Cash: who knows, its constantly fluctuating! It’s dwindling down as I write this. Gotta love diy remodeling!
Roth IRA: I do have some money in there. Enough for an economical car.

How in the hell am I going to reach our goal. I have been putting away money into a 401k for 18 years and I am only a 18% of the way to my financial freedom number…. It’s hopeless. I should just quit now and hope I can retire by the time I am 65.

Ok, I took a deep breath and now I’m back on track.

The Plan:

First, I bumped up my 401k savings.  That seems logical I thought.  Now, I am contributing the max allowed which of course is $18,000 per year according to my age.  The company matches 3.5% of what I make per year which will add another $2,500 to my 401k for a grand total of $20,500 deposited into my 401k.  Easy peasey right?!  Now a lot of people would probably stop reading right now.  I get it.  Life is not that simple.  It’s not easy raising a family, paying for rent or mortgage, utilities, car payments, food, entertainment, insurance, vacations, and everything else we are accustomed to.  But for those of us that have a different goal, a different pursuit of what happiness is.  It comes down to a simple philosophy for me.  Reduce or get rid of what doesn’t matter!

Second, I opened up an ETF(electronic traded fund).  I wanted to have an account that I can access at anytime, without penalty, and with the freedom to do with it as I will.  I decided that I will deposit a minimum average of $200 a week into this account.  I then talked to the Mrs Wannabe Retiree, and she will be doing the same as soon as she finishes nursing school and starts her career this summer. That totals a minimum of $20,800 being shoveled into the ETF account.  Holy crap, that’s about how much I made in a year when I was in my early 20’s!  Ok, now those that have not left after reading the last paragraph are probably f’n pissed off or don’t believe a word they are reading right now.  Younger people just getting started may only be taking home $200 a week.  Just remember these are my numbers because I didn’t do as much as I could/should have when I was younger.  I have to allocate this much to even have a chance of making my goal.

Third, we will save any extra money not allocated to something. (Extra paycheck month, bonus, tax returns, raises)  I anticipate that this will be between $5,000 to $10,000 added to the pot every year.

Some people may have some serious questions about how I came up with these numbers? Well, I figured out that we will need about $40,000 a year to sustain our current lifestyle.  This will include house payments, food, utilities, vacations, insurance, and all the other bills that most of us have.  We need about 25x what we spend annually to fund our retirement.

“How the hell are you going to fund your whole retirement on this amount?” Others may think it is more than they would need. If you run the numbers, which I very much like to do.  Use FireCalc to see what you may need to retire with confidence.  FireCalc takes the history of the stock market and outputs your probability of being able to be retired for X amount of years.  This includes all eras, like the great depression, dot com bubble, housing bubble, and all the good years as well. I find that a total of 1.1 to 1.2 million should be enough for me and mine.  As I get older I may not need as much as I think, I may need more.  I will prepare as best as I can and adjust when the time comes.  One thing I have figured out in my life, is that people in general are resilient and will find a way to survive.  And if you don’t survive, well…. none of this will matter anyway.

I didn’t take into account social security although I do believe there will be benefits dispensed when the time comes.  I wanted to focus on the things I can control which is our savings rate.  I may miss out on the latest and greatest technology, toys, and superficial desires.  But you can probably guess that none of that is important to me right now.  I will still have my house, my used paid off cars, my hobbies, a couple of vacations a year, and my family.  Will I live like a king? Nope, of course not.  Will I be suffering just to meet my goal? I hope the hell not!

 


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