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Author: royinstl Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Retirement Catchup Date: 11/10/2006 12:11 PM
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Hi all,

  The last 8 months I have been aggressively contributing to me and 
DW's 401K and Roth's. I had spent a good deal of time on the CCC board killing tons of debt. We killed $45,000 of consumer debt in a year and
 a half. Since May of this year we have taken my nearly $3000/month snowball and am now saving around $1000 bi-weekly and using the other
 $1000/month to get rid of HELOC and non-mortgage loans. 

   I am getting a pretty late start with retirement savings but from what I have learned from LBMM (Living Below My Means). I believe I 
have a reasonably good plan for retirement and thought I would share 
our numbers. 

I have used the compound interest calculator at:

http://www.math.com/students/calculators/source/compound.htm

to create the following table using an 8% interest rate and monthly contributions of $2250.


	Balance  	Contribution	Interest	Multiplier
Start	$52,000.00	$26,000.00	
1	$84,328.30	$26,000.00	$6,328.30	3.3
2	$119,339.84	$26,000.00	$9,011.54	3.05
3	$157,257.33	$26,000.00	$11,917.49	2.82
4	$198,321.94	$26,000.00	$15,064.61	2.6
5	$242,794.90	$26,000.00	$18,472.96	2.4
6	$290,959.09	$26,000.00	$22,164.19	2.22
7	$343,120.88	$26,000.00	$26,161.79	2.05
8	$399,612.08	$26,000.00	$30,491.20	1.89
9	$460,792.02	$26,000.00	$35,179.94	1.75
10	$527,049.87	$26,000.00	$40,257.85	1.61
11	$598,807.08	$26,000.00	$45,757.21	1.49
12	$676,520.11	$26,000.00	$51,713.03	1.37
13	$760,683.27	$26,000.00	$58,163.16	1.27
14	$851,831.95	$26,000.00	$65,148.68	1.17
15	$950,545.91	$26,000.00	$72,713.96	1.08
16	$1,057,453.09	$26,000.00	$80,907.18


I came up with the multiplier by seeing what $1000 will do at 8% for 15 years and on down.

 I am encouraged by looking at paying a few what-it games.
 For example, say I can only keep this going for 7 years I would have
 343K that even if I can't contribute anymore assuming I can earn an average of 8% I should still double my retirement funds in 9 years.  I
 am planning to keep track of these 16 milestones and try and make these numbers within a years time by this time next year I hope to have
 84K in my retirement accounts, if not I will have to either put in
 more or the milestone will just take longer.

Presently I am investing in a coffeehouse investment style choosing the
 lowest expense ratio or index funds that I can from me and DW's 401K
 and using Vanguard for both our Roth's and IRA Rollovers.  I do have a
 pension which will basically be 1% per year, which should be around
 25% of my salary by retirement so combined with social security and a 
4-5% draw rate, I believe I have a chance to do OK in retirement.

I welcome any thoughts on my plan, If I have messed up the numbers or
 if I am being overly optimistic with assuming an 8% growth rate. Hopefully you all are in a much better starting position than me and
 DW but, even so. Getting out of debt first has at least made a good
 retirement possible. I hope to even contribute more once we have
 worked down all non-mortgage debt and have a strong emergency fund. 

~
Roy (Wishing time gives you all a high multiplier)

p.s. sorry if paragraph or table are a little messed up I put everything in table format
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