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Subject:  Re: Only 27, but... Date:  12/11/2004  3:58 PM
Author:  intercst Number:  205241 of 875595

2FoolsInLuv asks,

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.

You can never put away too much, but young people can only save so much of their starting salary.

The key is to avoid the Jaguar and McMansion as your salary grows and save as much as you can of any pay increases. I was saving 40% to 50% of my gross salary the last 4 or 5 years before I retired at age 38. The first 3 or 4 years after I graduated from Engineering school I saved very little.

There's a free Excel spreadsheet that you can download from the Retire Early web site that allows you to make the calculation based on whatever savings and investment return assumptions you input.

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