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Author: RECCLES4 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: A test and a game Date: 5/25/2000 2:27 PM
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Hey Fools of retirement. I was presented with this challenge the other day. I present it to you to see what you would do. To be honest Im not so sure it can be done but then agian, if one takes a LOT of risk, then I guess it can.

A 35 year old man and 34 year old women who earn a total of 70k per year have no savings nor retirement plans and have never contributed to a 401k or other employer savings plans. They have Credit card debt at approx 15k and basicaly spend everthing they earn.

They want to retire in 15 years when he turns 50.

Besides getting a handle on debt and spending, how should they go about earning enough to retire in 15 years on about 35k per year?

I look forward to your answeres.

rec
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22195 of 75340
Subject: Re: A test and a game Date: 5/25/2000 2:41 PM
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Following the Foolish principles, the first step is to learn to live below their means, then work down that debt, and start an aggressive savings plan.

Short of that they should look for employers with good pension plans and give up on the idea retiring in 15 years.

Last chance is try lottery tickets.

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Author: RECCLES4 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22196 of 75340
Subject: Re: A test and a game Date: 5/25/2000 2:52 PM
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Following the Foolish principles, the first step is to learn to live below their means, then work down that debt, and start an aggressive savings plan.

Short of that they should look for employers with good pension plans and give up on the idea retiring in 15 years.


Nope, the test is how can they, while earning 70k per year turn that into 35K per year in 15 years. The assumption is that they have access to 401k plans now they just dont contribute.

rec
PS Lotto tickets are out. :)


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Author: foolme1111 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22197 of 75340
Subject: Re: A test and a game Date: 5/25/2000 3:02 PM
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There is not enough information to develop a plan. Do they they own their residence? If they have a mortgage, what is the APR, how much is owed, how many payments left. What other property do they own? What do they spend their on?

I am sure there is other info required, but you get the idea.

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22198 of 75340
Subject: Re: A test and a game Date: 5/25/2000 3:32 PM
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RECCLES4 asks,

Hey Fools of retirement. I was presented with this challenge the other day. I present it to you to see what you would do. To be honest Im not so sure it can be done but then agian, if one takes a LOT of risk, then I guess it can.

A 35 year old man and 34 year old women who earn a total of 70k per year have no savings nor retirement plans and have never contributed to a 401k or other employer savings plans. They have Credit card debt at approx 15k and basicaly spend everthing they earn.

They want to retire in 15 years when he turns 50.

Besides getting a handle on debt and spending, how should they go about earning enough to retire in 15 years on about 35k per year?


I just ran this case on the Gen-X Retirement Calculator at www.RetireEarlyHomePage.com

Since "safe" withdrawals rates in retirement are around 3.5% to 4.0% of assets, our couple will need about $1 million in savings for a $35,000 inflation-adjusted annual withdrawal.

If they get an average return over the next 15 years of 10% per annum, they will need to save 40% of their gross salary to get to $1 million by age 50.

If they are successful in finding investments that average a 15% return over the next 15 years, they'll only need to save 25% of their gross salary.

Unfortunately, even under the most favorable circumstances, early retirement is only open to "major league" savers.

intercst



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Author: rensimer Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22199 of 75340
Subject: Re: A test and a game Date: 5/25/2000 3:38 PM
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Nope, the test is how can they, while earning $70K per year turn that into $35K per year in 15 years.

If they can barely get by on $70K/yr presently, how do they expect to retire on $35K/yr in 15 years?

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Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22206 of 75340
Subject: Re: A test and a game Date: 5/25/2000 8:15 PM
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Can't be done. Using the retirement calculator from Quicken and assuming they'll want 70k per year in retirement and live to 95 and get an 11% return per year, they'd have to save around 64k per year. Retirement at 50 is not going to happen. They've wasted some of their greatest commodity, TIME.

JLC

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