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URL:  http://boards.fool.com/only-27-but-21740857.aspx

Subject:  Only 27, but... Date:  12/11/2004  3:21 PM
Author:  2FoolsInLuv Number:  205231 of 744285

Thanks in advance to anyone who take the time to reply. I apologize for the length of this post, and any spelling errors.

I am 27 years old, and my wife of two months is 25. We recently finished graduate school, and have started our careers in south Florida. We both love our jobs, are making a liveable income (by our standards, probably low by other peoples) and are looking forward to a long life together. We also want to plan for the future NOW. We don't make enough money to put off a savings plan until it's too late.

That being said, I know retirement plans are multi-faceted and ever-changing. It will take dillegence and considerable attention. I am trying to take things in steps, and my first step is what I call my "MONTHLY CONSERVATIVE PLAN"

The MCP basically works like this: I want to put $11,580 away a year into some sort of tax-advantaged funds. Why that much? Because the Fool's calculators say that if I put $965 away each month for 12 years, and earn just 10% on those contributions, I will have $200,000 at the end of that period.

I break the $11,580 down like this:
1) 7% of my salary matched by my employer to my 403(b) = $2520
2) 7% of my salary contributed myself to my 403(b) = $2520
3) $6540 ($545 monthly) contributed between a Traditional IRA and a Roth IRA.

Admittedly, this does not factor in pay raises which would increase my matched amount. That one we'll just have to take as it comes. We use a "pay yourself first" philosophy in our budgeting. The $545 a month might be a little tight now and then, but I'd rather make that contribution and then budget the rest accordingly. My 403(b) contribution is automatic, also. All monthly budgeting is AFTER that amount has been witheld.

I wanted to set up this aspect of my plan and make it habit BEFORE I start picking individual stocks. I like this plan because of another calculation in the Fool's calculators. If I reach my $200k goal in 12 years, and then NEVER CONTRIBUTE AGAIN, AND the fund grows at only 8% with 3.5% inflation, then when I am 60, it will be worth almost $500k in today's dollars at that point.

I'm curious how you all think I have done with this first step of my plan? Am I putting too much away too early? Is my math wrong? I would really appreciate any feedback, since I want this plan to start on January 1 of this year.

-Ryan
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