Educating the Wheelers

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Chronicling the Experience of Educating our Children and Managing our Family

Thursday, January 19, 2006

Retirement Target

Amazingly, Andrew and I have never actually put hard numbers to our retirement goal before last night -- it's always just been "save as much as we can." He asked me what our goal should be and I thought 2 million. So we crunched the numbers.

We took our current savings [we're leaving out home equity/mortgage for our calculations, but I'd estimate we've got about 100k equity in our house], our current rate of savings, estimated Social Security income [we estimate 0 dollars], and expected annual rate of return [we looked at 4, 5 and 6%]. This puts us at the 2 million mark around 19-24 years, depending on return.

We intentionally chose very conservative numbers because we'd rather be pleasantly surprised by market returns or Social Security than the alternative. This also assumes that we never up our yearly contribution, which I certainly hope/plan to do. On the other hand, it also doesn't account for possible financial catastrophe such as long term job loss and, uh, our children's college expenses. Heh. [That's not entirely true. The plan is to invest/save any future bonuses, stock windfalls and raises, so that does help mitigate the college factor.]

Since Andrew is currently 35 and I am 32, I feel like we're doing pretty good.


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