The Mission

Since we were married, Mrs. ExitYoung and I would occasionally look at budgets and discuss income, spending, retirement.  What do we want to do when we retire?  Travel the world of course.  Isn’t that what people do when they retire after all?  Ok so we need $100 to $150k+ per year in retirement.  That’s somewhere from $4 million to $5 million to get there safely right?  4 percent rule be darned (I’ll get more into this later).  Our retirement planning was nothing but far off, vague, absurdly inflated numbers.  With planning like that the only reasonable conclusion is that we need to keep working (forever).  Besides, we have to worry about health care, college for kiddo, the stock market, inflation and who knows what else.  Best to over save than step out of the work force and find out later that we don’t have enough and meanwhile our skills and resumes have grown stale.

Well, we recently saw the light.  This doesn’t mean we’re going to chuck it all and live from backpacks.  What it does mean is a re-evaluation of what we really need and what is really important.  Would we downsize to retire earlier?  Would we move to a cheaper cost of living location?  Would we give up cable?  Dining out?  A car?  Beer?  At some point the answer is no, and we are still working on finding that line.  What is the purpose of retiring if you’re not any happier?

How much we’ll need

What we’ve decided so far is the we could live the way we want for about $80,000 a year in retirement.  To some, that sounds like a ton.  To others, it will sounds like too little.  For us, I think it an amount that will allow us to do what we want to do and be happy in retirement.  It will also leave cushion to draw less in bad years.  For comparison, last year we spent around $200k, a humongous amount in most anyone’s book.  Almost half of that went to taxes including state, local, medicare, real estate, etc.  A sizable amount went to having a baby and first year kiddo expenses.  As I combed through and really thought about which expenses would decrease substantially or completely in retirement – such as income taxes, commuting costs, a car, medicare, social security, mortgage interest – I figure we need to decrease our expenses by about $20k to get to $80k.  So how do we do that?  That is a bit of a work in progress, more on that in future posts.

So if $80k is the number, how much savings do we need to get there?  4 percent is a popular rule of thumb.  In general, that means that you can spend 4% of your retirement savings each year and stand a very likely chance of not running out of money.  Using the 4 percent rule, we would need $2 million.  As I remain somewhat of a worry wart, we have set our goal at $2.5 million in retirement savings.

Starting Point

Our starting point is a bit ahead of most, but originally it was $0.  I’ll explain how we got to here.  My wife and I have always been on the frugal side.  I will admit that our living standards did grow faster than I would have liked.  That said, we’ve never been keep up with the Joneses type people and as long as we’ve been married we’ve been saving half of our after tax earnings.  We are both college educated with business related majors.  We have always worked at companies with 401k plans and some level of 401k match.  We take advantage of any and all benefits available for retirement.  Starting from nothing in 2002, we worked our way up to maxing the contributions to our 401k plans by 2008.  In 2010, we were able to start saving outside of our 401k plans and saved, on average, $60k per year of additional investment savings.  All the while we were near fully invested in the stock market in diversified mutual funds and ETFs.  The result is that as of now we have over $1.5 million in investment savings.  $1,547,904.67 as of 9/3/16 to be exact.

⇒ Continue the journey in our Posts

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