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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5068  
Subject: Re: Starting LATE? Too Late?? Date: 2/14/2006 1:41 PM
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One thing- it is never too late!

Here are some projected numbers for you. I knocked the "real rate of return" to 6%- thus you would probably have more money than this, but this is reflected in todays dollars. Thus, I am assuming a 9% return with a 3% inflation- or something akin to that.

The first column is your age
The second column is your 401k, starting with 30k and with 6k additional each year (as you indicated)
The third column is additional savings of 7k a year (as outlined in the budget board).
The fourth column is your total savings for each year- expressed as a cash value in thousands.
The last column is your "safe withdrawal" of 4% a year. That is to say, that is a normal expectation for safe withdrawal of an account without depleting it unduly.

36 30 7 37 1.48
37 37.80 14.42 52.22 2.09
38 46.07 22.29 68.35 2.73
39 54.83 30.62 85.45 3.42
40 64.12 39.46 103.58 4.14
41 73.97 48.83 122.80 4.91
42 84.41 58.76 143.16 5.73
43 95.47 69.28 164.75 6.59
44 107.20 80.44 187.64 7.51
45 119.63 92.27 211.90 8.48
46 132.81 104.80 237.61 9.50
47 146.78 118.09 264.87 10.59
48 161.59 132.17 293.76 11.75
49 177.28 147.11 324.39 12.98
50 193.92 162.93 356.85 14.27
51 211.55 179.71 391.26 15.65
52 230.25 197.49 427.74 17.11
53 250.06 216.34 466.40 18.66
54 271.06 236.32 507.38 20.30
55 293.33 257.50 550.83 22.03
56 316.93 279.95 596.88 23.88
57 341.94 303.75 645.69 25.83
58 368.46 328.97 697.43 27.90
59 396.57 355.71 752.28 30.09
60 426.36 384.05 810.41 32.42

You can see that the last column indicates how much you have to live on with the above scenarios of saving. At 55 you could retire on 22k a year. Is that livable? Perhaps not if you have health insurance concerns. At 60, you will have 32k, which is a lot easier to handle even with health insurance.

But as you can tell- it comes down to: how much do you need to live on? If you crank up your savings, how much faster does it bring down the above values?

36 30 12 42 1.68
37 37.80 24.72 62.52 2.50
38 46.07 38.20 84.27 3.37
39 54.83 52.50 107.33 4.29
40 64.12 67.65 131.77 5.27
41 73.97 83.70 157.67 6.31
42 84.41 100.73 185.13 7.41
43 95.47 118.77 214.24 8.57
44 107.20 137.90 245.10 9.80
45 119.63 158.17 277.80 11.11
46 132.81 179.66 312.47 12.50
47 146.78 202.44 349.22 13.97
48 161.59 226.59 388.17 15.53
49 177.28 252.18 429.46 17.18
50 193.92 279.31 473.23 18.93
51 211.55 308.07 519.62 20.78
52 230.25 338.55 568.80 22.75
53 250.06 370.87 620.93 24.84
54 271.06 405.12 676.18 27.05
55 293.33 441.43 734.76 29.39
56 316.93 479.91 796.84 31.87
57 341.94 520.71 862.65 34.51
58 368.46 563.95 932.41 37.30
59 396.57 609.79 1006.35 40.25
60 426.36 658.37 1084.74 43.39

Now I have cranked up your savings another 5k a year- quite a bit, but perhaps doable if you got rid of both new cars and had older cars. Now your 55 retirement total is around 30k a year- much more liveable and achievable. That takes an extra $416 a month above and beyond the extra savings outlined before (another car payment pretty much). I personally think that would be too much to jump in all at once. I would start though by seriously looking at each item, and cutting any which are not contributing to your lifestyle in a significant way. Then add back in some discretionary fun money, and you are ready to start moving forwards.

Just for grins, lets look at the above savings assume you DO NOT change your spending habits, and continue saving in the 401k:

36 30 0 30 1.2
37 37.80 0.00 37.80 1.51
38 46.07 0.00 46.07 1.84
39 54.83 0.00 54.83 2.19
40 64.12 0.00 64.12 2.56
41 73.97 0.00 73.97 2.96
42 84.41 0.00 84.41 3.38
43 95.47 0.00 95.47 3.82
44 107.20 0.00 107.20 4.29
45 119.63 0.00 119.63 4.79
46 132.81 0.00 132.81 5.31
47 146.78 0.00 146.78 5.87
48 161.59 0.00 161.59 6.46
49 177.28 0.00 177.28 7.09
50 193.92 0.00 193.92 7.76
51 211.55 0.00 211.55 8.46
52 230.25 0.00 230.25 9.21
53 250.06 0.00 250.06 10.00
54 271.06 0.00 271.06 10.84
55 293.33 0.00 293.33 11.73
56 316.93 0.00 316.93 12.68
57 341.94 0.00 341.94 13.68
58 368.46 0.00 368.46 14.74
59 396.57 0.00 396.57 15.86
60 426.36 0.00 426.36 17.05
61 457.94 0.00 457.94 18.32
62 491.42 0.00 491.42 19.66
63 526.90 0.00 526.90 21.08
64 564.52 0.00 564.52 22.58
65 604.39 0.00 604.39 24.18

You can see that at age 65 you can retire on 24k a year- liveable, but tighter. With social security and medicare, you could make a good go of it. Thus, you are in a position right now to see that what you are really aiming for is to retire early. You are already aiming to retire at 65.

How much do you want that? And is it worth the sacrifices to your lifestyle?
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