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Wow, such great responses! Thanks all!

First some general comments about where we are currently, since my question spawned other questions. I have a plan, with just our cash accounts, on how they'll grow toward retirement. My spreadsheet is set up with one-row-per-year, and using these assumptions:
- Contributions will grow by $500/yr
- I'll earn 10%/yr till 2010 (when I hit 35) since I'm 100% in stocks right now, then the rate will drop by 1/6% per year after that since I'll start diversifying toward bonds; I'd hit 5% at age 65.
- I have a column for a single inflation-adjusted dollar, starting 2002 and reducing by 3.5% each year (dollar = last_year's_dollar/1.035).

With these assumptions and our starting point, we'd have $6.9 mln in 2040, when I'll be 65, or $2.3 mln in 2002 dollars (my dollar in 2040 is worth $.27).

Now, the problem here is that I was counting my wife's pension (she's a California Teacher, by the way, so we're talking STRS ( since that was a question) as just part of the lump sum we had in our contributions since I really don't know how else to plan for it. Obviously, though, I'm not going to be able to control her contributions like I'm controlling my 401(k), so the gain I get on that isn't realistic.

I think that answers your question on inflation--I think I'm doing it the way you suggest, though in a round-about way.

It sounds to me like you're advocating normalizing my cash accounts to what I'd get out of them monthly in retirement--e.g. normalize to cash flow. That sounds good to me.

I hear you on the draw down vs. forever accounts. Sounds like I'll have to start looking into the "retire early" board--I have no intention of stopping work before I'm 65, but it sounds like folks there are interested in the same things I am.

Thanks for the very long response, it was very helpful.

What are you trying to accomplish in your accounting?
- To formulate my expected financial picture at retirement
- To predict the amount I need to save to get there, e.g. a retirement plan
- To be able to track how I'm doing toward accomplishing the retirement plan

Determine your current net worth? Find out how much you are earning currently?

Nope, got that all down. I am a powerhouse of budgeting/cash flow spreadsheets. It's the future savings planning that's giving me headaches.

Figure out when you have accumulated enough to retire? Determine your projected retirement income?

I'll probably retire at 65, though The Plan is to move out of the private sector and into a teaching job once it's feasible. So I guess "yes" to both of those questions.


Yes, you read me half-right, and you answer compliments Chuck's answer; I've also heard about taking 6% of a cash asset at retirement as the starting cash flow, so I guess your suggestion is just the same thing in reverse. It makes sense, but I think I might want to normalize to cash flow instead. It's easier for me to visualize the knobs to turn on the calculations to figure out how cash flow I can get out of a fixed sum than vice versa.

As far as insurance goes, we're still not contributing a dime to my wife's 403(b), and we have a ways to go to build up an emergency fund. For the time being, we have a term policy; we'll probably look at converting to permanent once we fully fund the 403(b) and have that e-fund stocked.

Thanks again for all the answers!
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